Cryptocurrency Market Faces Significant Decline Amidst New U.S. Tariffs
The cryptocurrency market experienced a dramatic downturn on Friday, with XRP and Dogecoin (DOGE) leading the pack as they both plummeted over 10%. This drop was largely influenced by the announcement of fresh U.S. tariffs on Chinese goods, which sent shockwaves through Asian markets and contributed to an already turbulent week for digital currencies.
Bitcoin (BTC) saw a significant decline of 7%, bringing its price close to $79,000—a level not seen since November. This marks a staggering decrease of nearly 30% from its January peak, which exceeded $108,000. Other major cryptocurrencies such as Ether (ETH), Cardano’s ADA, and BNB Chain’s BNB also faced considerable losses, each dropping at least 9% during the same timeframe.
The overall market capitalization of cryptocurrencies fell by 8%, settling at $2.7 trillion. This decline erased all of the gains made since the election of U.S. President Donald Trump in early November. Additionally, the broad-based CoinDesk 20 (CD20) index reflected this downturn, dropping nearly 9%.
Despite a solid earnings report from Nvidia on Wednesday, the positive sentiment was unable to counteract the prevailing market gloom. Global equities have struggled due to a mix of renewed tariff concerns, a slowing economy, and an already overstretched market position. Traders noted that this scenario has inevitably affected the cryptocurrency sector, given Bitcoin’s strong correlation with the S&P 500 index.
Augustine Fan, head of insights at SignalPlus, shared his perspective with CoinDesk via Telegram, stating, “On a year-to-date basis, ex-BTC tokens and trading sentiment have faced substantial challenges, primarily due to the depletion of liquidity resulting from various memecoin surges. Furthermore, Bitcoin has been under pressure from an influx of selling related to exchange-traded funds (ETFs), which reached record highs last week.”
The losses in the cryptocurrency market mirrored those seen in Chinese stocks, which tumbled following the announcement of a new 10% tariff on imports from China. This development heightened concerns regarding an escalating trade war between the U.S. and China, the two largest economies in the world. The newly imposed tariff is in addition to an existing 10% tax on Chinese goods that began earlier this month, raising fears of further economic strain on China, which is already grappling with a property crisis and declining prices.
This tariff situation could potentially dampen the recent stock market rally driven by advancements in artificial intelligence in China, particularly led by competitors to ChatGPT, such as DeepSeek. The timing of this announcement comes just ahead of China’s significant annual meeting, the National People’s Congress, scheduled for next week. During this meeting, leaders are expected to unveil economic strategies and growth objectives that could influence market sentiment.
Market analysts believe that any decision by China to increase spending or stimulate consumer purchasing to bolster its economy could significantly impact Bitcoin and crypto prices, making it a crucial data point to monitor in the upcoming week.
Nevertheless, the sentiment among many Bitcoin traders remains bearish as they await further developments. “Bullish option speculators are capitulating, with volatility decreasing alongside a falling spot price, as call options are being offloaded in favor of puts,” Fan added. “Moreover, concerns surrounding MicroStrategy (MSTR), which saw a 10% drop, are injecting additional risk into the Bitcoin landscape, particularly due to their convertible funded acquisitions, pushing bearish sentiment to a near-term extreme on various technical indicators.”
