Cryptocurrencies Tumble Before Trump's Tariff Announcement Decision
In a climate of heightened caution and uncertainty among investors, the potential new tariffs announced by President Donald Trump targeting over 100 countries are expected to cause significant downward pressure on the prices of Bitcoin and Ethereum.
The escalation in trade has led to sharp declines in Bitcoin's price, with a drop of about $860 to roughly $108,000 after Trump imposed 25% tariffs on countries like Japan and South Korea. Similarly, Ethereum and other cryptocurrencies also fell amid these tensions. More severe tariff threats, such as the potential 100% tariffs on nations trading with Russia, have caused Bitcoin's price to plummet below $117,000 and led to a large $150 billion crypto market loss.
The cyclical correlation between geopolitical trade conflicts and crypto market volatility appears increasingly strong. Trade disruptions feed macroeconomic uncertainty that pushes investors toward cashing out digital assets. The possibility of tariff escalation to major economies, including the EU and India, could deepen the global economic fallout, thus exerting further negative pressure on crypto asset prices.
However, cryptocurrencies could function as a hedge against the devaluation of local currencies and restrictions on cross-border payments in emerging markets affected by tariffs. They could consolidate as a parallel financial infrastructure, especially in countries facing high tariffs or exclusion from the SWIFT system.
In the short term, the "Crypto Week" in Washington, the behavior of Bitcoin ETFs, and the decisions of the Federal Reserve will be key factors in determining the direction of digital assets. The so-called "Crypto Week" begins next week, during which the Congress is expected to debate three key projects for the cryptocurrency market. Countries may receive an extension of several weeks to negotiate before tariffs come into effect on August 1, which could temporarily calm the markets.
On July 8, the price of Bitcoin is hovering around $108,700. Cryptocurrencies like Solana, Cardano, XRP, and Dogecoin have registered drops of between 1% and 3%. Ethereum touched $2,520 on July 8, having corrected by 2.5% in the last 24 hours. Some meme coins linked to political figures have lost up to 10% of their value.
The use of DeFi platforms is expected to increase in regions where commercial sanctions make access to traditional banking services difficult. Trump has shown flexibility in implementing tariffs, delaying deadlines and extending truces, creating an environment of prolonged uncertainty. New tariffs affecting over 100 countries could come into effect according to letters sent by the White House on July 9.
In summary, the expected impact of Trump's tariffs on over 100 countries is heightened volatility and downward pressure on Bitcoin and Ethereum prices. This is consistent with observed immediate market reactions to previous tariff announcements, with no signs of easing unless trade tensions subside or agreements are reached.
- As trade tensions escalate and new tariffs loom, finance experts are closely monitoring the crypto market, expecting significant downward pressure on Bitcoin and Ethereum prices due to general-news events like the potential tariffs targeting over 100 countries.
- In addition to the direct impact of tariffs on the crypto market, politics could indirectly influence investing in technology by changing the regulatory landscape, potentially affecting the growth and adoption of digital assets.
- Despite the short-term challenges posed by tariffs, the long-term potential of cryptocurrencies as an alternative financial infrastructure, especially in regions facing limitations in traditional banking services, remains a promising aspect for investing in the technology sector.
