The price of Bitcoin has taken a dive as President Donald Trump’s new trade war with Canada, Mexico, and likely China has cryptocurrencies slumping.
Over the weekend, Trump announced new taxes on imports from the U.S.’s top trade partners. Imports from Canada and Mexico will be taxed at 25%, while Chinese goods will be taxed at 10%. Trump made an exception for Canada’s energy exports, which the U.S. relies on, and issued a lower 10% tariff.
He also reiterated a threat to issue tariffs on imports from the European Union, which said it would “respond firmly” to any action. Canada has already announced its own retaliatory tariffs on U.S. goods, beginning with a 25% tariff on $20.4 billion worth of goods. Mexico said it will announce retaliatory tariffs but has not released additional details. China has said it would challenge the tariffs at the World Trade Organization.
Although cryptocurrencies aren’t directly impacted by tariffs, the economic uncertainty that can emerge as a result can affect them. During such times, investors tend to be willing to snag a profit when they can from volatile assets and rely on more stable alternatives.
Bitcoin has shed 2,622 points, or 2.68%, to $95,059. Just a few days ago, Bitcoin was worth more than $105,559. Tesla CEO and senior Trump advisor Elon Musk’s favorite meme coin, Dogecoin, is down by almost 5%, while the president’s $TRUMP meme coin— which he announced late last month — has fallen by almost 16%. First Lady Melania Trump’s own meme coin, $Melania, is down 12%.
Ethereum is down by almost 10%, Solana has fallen by 7%, and XRP has dropped 8%. Cardano is also down by more than 11%. According to CoinGecko, the global cryptocurrency market capitalization has dropped 8% over the last 24 hours.
Shares of crypto exchange operator Coinbase (COIN) have plunged 6% in pre-market trading. Microstrategy (MSTR), which has kept up its Bitcoin buying spree, has watched its stock shed more than 7% in pre-market trading.
And it’s not just crypto that’s sinking. The Dow Jones Industrial Average and the S&P 500 are poised to be down when the market opens.
“These announcements have come as a shock to many investors who expected tariffs would only be imposed if trade negotiations failed,” Goldman Sachs (GS) analysts said in a note Sunday.
Goldman estimates that Trump’s tariffs would reduce its S&P 500 earnings per share by roughly 1% to 2% for every 5-percentage-point increase in the tariff rate. Without taking into account any additional impacts, the investment bank estimates a 2% to 3% hit to the S&P 500 companies’ earnings per share.
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