Trump Tariffs Trigger Crypto Crash
Amidst heightened tensions over President Trump's proposed tariffs, cryptocurrency markets have experienced a sharp selloff. The MVIS CryptoCompare Small-Cap Index, tracking smaller cryptocurrencies, plummeted by 21% on Monday, extending an 11% decline from the previous day. Ether, the second-largest cryptocurrency, briefly dropped by 27% before recovering some losses.
Uncertainty Shadows Market
President Trump's actions have introduced a level of uncertainty for crypto traders. Despite initial optimism following his election, nearly all major digital tokens have declined significantly year-to-date.
Altcoins Reel from Trade Concerns
Caroline Bowler, CEO of BTC Markets, attributes the crypto declines to concerns about trade wars and stagflation. These concerns have rippled across altcoins, including Bitcoin.
Steepest Drop Since TerraUSD Collapse
The MVIS CryptoCompare Small-Cap Index's two-day drop is the steepest since May 2022, when the collapse of TerraUSD destabilized crypto markets.
Bitcoin Shows Resistance
Despite the overall selloff, Bitcoin has outperformed smaller, more speculative tokens. Over $2.2 billion in bullish crypto positions have been liquidated in the past 24 hours.
Market Outlook
Sean Dawson of Derive.xyz warns that a protracted trade war with China and US allies creates an unfavorable environment for digital assets, which are sensitive to interest rates. Ether may find support at $1,900-$2,000, but there is a 25% chance of it falling to $2,000 by month's end.
Memecoins Fall
The selloff has also impacted memecoins, such as those recently launched by Trump and his wife Melania. These assets have declined by 75% and 90% from their peaks.