TLDR
- Bitcoin drops 2% and falls below $119K after Trump announces tariff threat.
- Ether, Solana, and XRP also fall sharply in response to rising trade tensions.
- Crypto stocks like Robinhood and Coinbase see losses of 5% to 6%.
- Gold rises 1% to over $4,000 per ounce as investors seek safe-haven assets.
Bitcoin took a sharp downturn on Friday, falling below $119,000, after former U.S. President Donald Trump announced plans to raise tariffs on Chinese goods. This threat of escalating trade tensions, fueled by China’s earlier export controls on rare earth metals, caused a ripple effect in the cryptocurrency market. Other major cryptocurrencies, such as Ether and Solana, also suffered losses, alongside crypto-related stocks and traditional markets.
Tariff Announcement Shakes the Crypto Market
The announcement made by President Trump on Truth Social sent shockwaves through financial markets. Trump stated that he was preparing a “massive increase” in tariffs on Chinese goods in response to China’s export controls on rare earth metals.
Rare earth elements are critical in the production of high-tech products, including those used in electric vehicles and smartphones. This move raised concerns over a potential escalation in the U.S.-China trade war.
Following this news, Bitcoin saw a sharp drop, plunging below the $119,000 mark from a high of $122,000. The decline was part of a broader sell-off in the cryptocurrency sector, which saw Ether (ETH), Solana (SOL), and XRP each experience significant drops. Investors reacted quickly, with the broader market adjusting to what appeared to be growing geopolitical instability.
Broader Crypto Market Suffers
The downturn in Bitcoin was mirrored across other major cryptocurrencies. Ether, which had also been riding a strong upward trend, fell alongside Bitcoin. Solana (SOL) and XRP were not spared either, each losing substantial value as trade war fears grew. Cryptocurrencies, often seen as speculative assets, tend to be more sensitive to market shocks compared to traditional investments.
The sell-off extended to Crypto ralated stocks Companies like Circle (CRCL), Robinhood (HOOD), and Coinbase (COIN) all experienced notable declines. Circle dropped over 6%, while Robinhood and Coinbase saw their stocks fall by approximately 5% each. These companies, which have a large exposure to the cryptocurrency market, reflected the overall pessimism that emerged following the tariff threat.
Traditional Markets Also React to the News
The impact of Trump’s tariff threat was not limited to the cryptocurrency market. Traditional financial markets also experienced negative movement. WTI crude oil prices fell sharply, dropping nearly 4% and falling below $60 per barrel, marking the lowest price since early May. This decline in oil prices added to concerns of a potential global economic slowdown.
Both the S&P 500 and Nasdaq saw declines as well. The S&P 500 dropped by 1.6%, while the Nasdaq fell by 1.3%. Investors sought safer assets in response to the heightened tensions between the U.S. and China. While cryptocurrencies and stocks were under pressure, gold saw a rise in value, jumping over 1% to trade above $4,000 per ounce. This suggests that gold remains a preferred asset for risk-averse investors.
Bitcoin’s Recent Record High and Rapid Retreat
The price of Bitcoin had recently hit an all-time high, surpassing $126,000 just days before the tariff threat. However, the sharp decline in the wake of Trump’s announcement highlights the volatile nature of the cryptocurrency market. The decline of around 6% from Bitcoin’s peak over the past four days underscores the sensitivity of digital assets to geopolitical and economic uncertainties.
At the time of reporting, Bitcoin was priced around $118,800, reflecting a loss of roughly 2% in the past 24 hours. The rapid retreat from its all-time high left many investors cautious, with some speculating that the market may remain under pressure as trade tensions continue to rise.
In the broader context, the recent downturn in cryptocurrency prices signals the ongoing challenges the market faces. As global tensions increase, Bitcoin’s role as a “safe haven” asset, often compared to gold, is questioned once more. The direction of the crypto market will depend on how the geopolitical situation unfolds in the coming weeks.
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