Why Is Crypto Crashing: Trump Tariffs and Trade War Crash Market?

Why Is Crypto Crashing and Will It Recover? Trump Tariffs Crash Market

The crypto market witnessed a sharp decline, with the total market cap dropping to $2.77 trillion, reflecting an 8.64% decrease in just 24 hours. This drastic fall followed the Trump investment announcement and new tariff impositions, which have sparked global market uncertainty.

Why Is Crypto Crashing and Will It Recover?

Trump Tariffs and Trade War Crashes Crypto Market

One of the major reasons why crypto is down today is the Trump Trade War, which officially escalated after the U.S. government announced an increase in tariffs. Donald Trump raised tariffs on Chinese goods from 10% to 20%, while Canada and Mexico now face a 25% tariff. This has led to economic instability, affecting both traditional and crypto markets. In retaliation, China imposed new tariffs of up to 15% on U.S. agricultural goods, adding further pressure to global trade.

According to The Kobeissi Letter, the impact of the tariff announcement was recorded on the stock market. The stock market wiped out $1.5 trillion in a single day, with the S&P 500 experiencing heavy losses between 10:00 AM and 3:30 PM ET. 

Source: X

Traders had already been bracing for uncertainty, and the confirmation of Trump’s tariffs triggered widespread sell-offs.

Trump Crypto Reserve Announcement: A Pump-and-Dump Strategy?

In a surprising move, Donald Trump announced the inclusion of Bitcoin (BTC) and Ethereum (ETH) in a proposed U.S. crypto strategic reserve, prioritizing Solana (SOL), XRP, and Cardano (ADA) first. This announcement initially boosted the crypto market to $2.79 trillion, reflecting a 4.41% surge on March 3. However, the gains were short-lived, as the market plunged by 8.64% the next day. This has raised speculation about whether this was a calculated strategy to manipulate market prices. Although there is no direct evidence of a pump-and-dump scheme, investors remain skeptical.

Fear and Greed Index Signals Extreme Fear

The Fear and Greed Index has shifted dramatically from Fear (33) yesterday to Extreme Fear (15) today. Just a month ago, the market was in Greed mode at 60, indicating a bullish sentiment. However, with rising uncertainties, investors are now extremely cautious.

Historically, extreme fear can indicate that investors are overly concerned, which could present a buying opportunity for long-term holders. Conversely, when the market is in Greed mode, a correction is usually expected.

Current Market Performance

• Bitcoin (BTC): $83,929.75, down 9.34% in 24 hours, with a market cap of $1.66T and $73.61B in trading volume.

• Ethereum (ETH): $2,103.51, down 10.49%, with a market cap of $253.56B.

• Cardano (ADA): $0.8258, suffering a 14% drop, with a market cap of $29.07B.

Will the Market Recover or Crash Further?

A potential turnaround could be seen in the coming days with two major catalysts:

1. White House Crypto Summit (March 7): Donald Trump will host a crypto summit, bringing together top industry leaders from Coinbase, Binance.US, and Andreessen Horowitz to discuss crypto regulations and blockchain innovation. If a clear regulatory framework is established, investor confidence may rise.

2. Upcoming ETF Announcements: New spot ETFs for XRP, Cardano, Polkadot, Dogecoin, and Litecoin could drive institutional investment, pushing the market towards a bullish phase.

For now, market volatility remains high, and investors are closely watching regulatory developments. While some fear a deeper crash, others see this as an opportunity for accumulation before the next bull run.