- The US will enact reciprocal tariffs on its international trade partners, calculated as half of each country’s respective rates.
- The minimum tariffs will be set at 10% on all imports and 25% on vehicles manufactured abroad.
- Following the tariff announcement, Bitcoin and leading cryptocurrencies like Ethereum, Solana, and XRP experienced significant drops in value.
On Wednesday, Bitcoin (BTC) and the broader cryptocurrency market underwent a swift correction in response to President Trump’s announcement regarding reciprocal tariffs, which are determined as half of the tariffs imposed by other countries on the US. The tariffs incorporate a 10% baseline on all imports and 25% on cars manufactured overseas.
After the announcement, Bitcoin fell by 2%, while Ethereum (ETH), XRP, and Solana (SOL) recorded declines of 4%, 3%, and 4%, respectively, according to asset price data.
Bitcoin and cryptocurrency market react as tariffs incite volatility
These tariffs will have an impact on 185 countries, marking it as one of the most extensive tariff measures in US history. The tariffs will be set at 50% of the rates a country levies on the US, with a 10% minimum for other countries not included in the list of 185.
Tariffs on vehicles will take effect on Thursday, with baseline tariffs starting Saturday, while the reciprocal tariffs will begin on April 9.
This tariff announcement triggered notable declines in major cryptocurrencies, contributing to a 5% decrease in total market capitalization across the crypto sector.
Bitcoin’s value dropped by 2%, approaching $83,000 at the time of writing. Meanwhile, other notable altcoins such as Ethereum, XRP, and Solana faced quick declines as well, plunging 4%, 3%, and 4%, respectively.
As a consequence, crypto futures liquidations surged to $511.77 million within the last 24 hours, according to available data. The highest share of liquidations belonged to Bitcoin traders, totaling $179.71 million. The drop in cryptocurrency prices reflects a growing risk-averse sentiment in the financial markets.
“The initial market shock will likely increase volatility, but it may be a short-term effect. More enduring impacts will largely depend on how swiftly the market adapts to these significant changes,” commented the Founder of B2 Ventures.
The traditional stock market also witnessed sharp declines following the announcement of the tariffs. The S&P 500 index dropped by 3.7%, erasing $2 trillion in market capitalization.
US Treasury Secretary Scott Bessent discussed the pronounced downturns in US stocks during an interview on Bloomberg TV, remarking that “the Nasdaq peaked on DeepSeek day so that’s a Mag 7 problem, not a MAGA issue.”
Other categories of crypto assets, including Artificial Intelligence, Memes, Real-world assets (RWA), and DePIN sectors, experienced declines of 4%, 3%, 4%, and 2%, respectively.
FAQs about Bitcoin, Altcoins, and Stablecoins
Bitcoin is the leading cryptocurrency by market capitalization, created to function as a form of money. This digital currency is decentralized, meaning it’s not controlled by any single person, group, or entity, which eliminates the necessity for third-party involvement in financial transactions.
Altcoins refer to any cryptocurrency other than Bitcoin; however, some consider Ethereum to be in a different category since it is one of the two foundational cryptocurrencies from which others fork. If this is accepted, Litecoin would be classification as the first altcoin, having been forked from the Bitcoin protocol and representing an “enhanced” version of it.
Stablecoins are cryptocurrencies engineered to maintain a stable value, with their worth supported by a reserve of the asset they correspond to. They typically tie the value of a particular stablecoin to a commodity or financial instrument, like the US Dollar (USD), with their supply managed by demand or algorithms. The primary objective of stablecoins is to create an accessible entry and exit point for investors interested in trading and investing in cryptocurrencies. They also enable investors to preserve value, as cryptocurrencies, in general, can be quite volatile.
Bitcoin dominance refers to the proportion of Bitcoin’s market capitalization compared to the total combined market capitalization of all cryptocurrencies. It provides insight into Bitcoin’s popularity among investors. A high level of BTC dominance typically occurs before and during a bullish market phase, where investors tend to gravitate towards relatively stable and highly valued cryptocurrency like Bitcoin. Conversely, a decrease in BTC dominance generally indicates that investors are reallocating their capital and/or profits to altcoins in pursuit of higher returns, which can spark significant rallies among altcoins.