The cryptocurrency market plummets following U.S. President Donald Trump’s assurance of scheduled tariffs on China, Mexico, and Canada, shaking investor confidence and causing the Crypto Fear & Greed Index to drop to “Extreme Fear”.
The indicator fell sharply from its neutral posture at 49 to a score of 25 over the past 24 hours. Along with a larger sell-off across all of the main digital assets, including Bitcoin and Ethereum, sentiment has sharply dropped.
Originally unveiled in early February, the tariff proposals tax imports from Canada and Mexico with a 25% tax, excluding Canadian energy products, which pay a 10% levy. Furthermore, Chinese imports are subject to a 10% charge. Leaders from Mexico and Canada have responded by hinting at punitive actions, hence raising more worries about an approaching trade war.
After the first announcement, Bitcoin dropped sharply from about $105,000 to about $92,900. With about $2.2 billion in assets lost as traders responded to uncertainty, Ethereum too suffered notable liquidations.
President Trump has already indicated that the tariffs will be imposed once the temporary pause period ends early next month, even though Canada and Mexico agreed to improve border security measures temporarily and stopped the tariff enforcement.
The price of Bitcoin dropped 4.5% over yesterday, falling below $92,000 for the first time since late November. The market for cryptocurrencies overall has dropped 8%, which lowers their entire value from $3.31 trillion to almost $3.09 trillion.
Beyond cryptocurrencies, the growing trade tensions have had effects on conventional financial markets. Over the preceding five trading days, the S&P 500 dropped 2.3%; the Nasdaq Composite dropped 4% during the same time frame.
Market analysts warn that ongoing political and economic unrest could drive more fluctuations in digital assets’ prices. As world trade rules change, investors might look for other hedges against uncertainty; cryptocurrencies could be quite important in the next financial plans.
