Bitcoin and Crypto Markets React to Trump’s Tariff Announcement

The cryptocurrency market experienced a brief setback following the latest announcement from US President Donald Trump regarding new tariffs on steel and aluminum imports. The tariffs, part of an ongoing trade dispute between the United States and its trading partners, sent shockwaves through the market before it began recovering.

On February 9, President Trump declared that steel and aluminum imports into the United States would be subject to a 25% tariff, according to a report from the Associated Press. The president also revealed plans for reciprocal tariffs on countries that impose high import fees on US goods, stating, “If they are charging us 130% and we’re charging them nothing, it’s not going to stay that way.”

Crypto Market Reaction: A Temporary Dip and Steady Recovery

In the wake of this announcement, the cryptocurrency market saw a sharp decline. Bitcoin (BTC) dropped to a low of $94,000 but quickly rebounded, crossing back over $97,000 as of the latest data from CoinMarketCap. Similarly, Ether (ETH) saw a brief dip to $2,537 before recovering to $2,645, showing resilience in the face of the tariff news.

While the market experienced an initial decline, the total market capitalization of cryptocurrencies also dipped temporarily. The market cap fell from $3.15 trillion to $3.10 trillion but has since climbed back to $3.13 trillion, signaling a recovery.

Despite the recovery, the Crypto Fear & Greed Index remains in the "fear" zone, registering a score of 43 out of 100 on February 10, down slightly from 46 the day before. The index, which gauges market sentiment for Bitcoin and other cryptocurrencies, has been hovering in fear territory for the past week, reflecting cautious sentiment among investors.

Trump’s Ongoing Tariff Plans and Market Impact

The announcement is part of a broader series of tariff measures President Trump has put forward. In addition to the tariffs on steel and aluminum, Trump has indicated plans to impose tariffs on a variety of goods, including superconductors, oil, gas, and copper, as well as further actions against the European Union (EU).

These measures follow Trump’s February 1 announcement of 25% tariffs on major trading partners Canada and Mexico, as well as a 10% tariff on China. This earlier announcement led to a sharp downturn in both stock and crypto markets, with estimates suggesting liquidations in the crypto market could have reached between $8 billion and $10 billion, according to Ben Zhou, the co-founder and CEO of Bybit.

However, a temporary pause on tariffs against Canada and Mexico, announced on February 3, helped the market regain some stability. While the pause is set to last for 30 days, Trump has left open the possibility of reinstating the tariffs once the pause period expires.

Looking Ahead: A Cloudy Economic Horizon

The impact of these tariff policies on the cryptocurrency market highlights the close connection between traditional markets and digital assets. While the initial reaction to Trump’s announcements has been negative, the market’s quick recovery suggests that crypto investors are remaining relatively optimistic.

As the geopolitical landscape continues to evolve, with further tariff actions potentially on the horizon, both traditional and digital markets will likely remain volatile. The crypto market’s ability to rebound from setbacks is a testament to its resilience, but the ongoing trade tensions and their economic consequences will continue to weigh on investor sentiment in the coming weeks.

In the meantime, crypto enthusiasts and investors will be closely monitoring both the global economic environment and the actions of US policymakers, as these factors will likely play a significant role in shaping the market’s trajectory.