Sign UpExplained: Did Trump's Tariffs Policy Lead to Massive Crypto Liquidations?
Intermediate
2025-02-10
US President Donald Trump has introduced tariffs on major trading partners like Canada and Mexico, sending financial markets dumping and painting an uncertain picture for the crypto space. The total market liquidation is expected to be “at least around $8 billion,” according to a major crypto CEX's founder.
Timeline:
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In February, Trump placed a 25% additional import tariff on Mexico and Canada and 10% on China
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Markets went spiraling, with major stock indexes and crypto seeing losses across the board
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Trump stated he intends to introduce tariffs on the EU — as well as oil, gas and steel soon afterward
While many are saying investors should buy the dip, some analysts are noting the increasing correlation between crypto and traditional markets, stating that the incoming tariffs could send Bitcoin tumbling further and increase market volatility.
Will further tariffs affect the price of BTC?
As Bitcoin adoption grows, the role of the asset has changed. Traders, investors and enthusiasts still debate whether Bitcoin is ultimately a risk-on or risk-off asset. According to analysts from Toobit, the price of risk on assets is driven by factors such as earnings, market sentiment and speculation vibe, while risk-off assets serve as safe havens during times of market uncertainty.
With the effect the tariffs have had on crypto markets, many analysts are now firmly in the camp that Bitcoin is actually a risk-on asset and that further market turbulence will likely negatively affect the price of BTC. Earlier these days, a famous crypto trader posted on X, “Bitcoin is mainly a risk asset. Tariffs this aggressive are very negative for risk assets and the economy will take a hit.”The best hope is that retaliations from countries targeted by US tariffs aren’t too high while the US and other countries find common ground fast so tariffs may be pared back fast, and soon.
The prospect of reconciliation seems especially far away given that as Trump signed the order, he said the US was not seeking any concessions from trading partners.
Different voices
Other market observers are unfazed by the market’s recent dip and believe the conditions currently putting downward pressure on Bitcoin could soon create a meteoric rise. Over the weekend, analysts and Crypto Twitter degens repeated the adage that investors should “buy the dip” in anticipation of further gains.
Many seasoned crypto traders believe that factors like a potential upcoming tax cut and the likely deregulation of the crypto industry in the US do provide a significant upside trend for Bitcoin. Stay updated with more industry observations from Toobit Academy.
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