Bitcoin Price Drops After Trump's Tariff Announcement
The price of Bitcoin took a sharp dive under $101,600 on Friday following the confirmation by President Donald Trump's administration that new tariffs on China, Mexico, and Canada are set to be implemented. This announcement led to a nearly 3% decline in Bitcoin's value over the last 24 hours, bringing it down to around $102,060.
During a press conference, White House Press Secretary Karoline Leavitt declared that the U.S. will impose a 25% tariff on imports from Mexico and Canada, with China facing a 10% tariff. These tariffs are slated to go into effect as soon as they are fully announced on Saturday. The news has not only stirred the crypto markets but also influenced traditional financial sectors, as investors adjust to the new economic landscape.
Market Reactions and Economic Implications
The introduction of these tariffs could exert indirect pressure on Bitcoin's price, primarily by strengthening the U.S. dollar in the short term. Analysts argue that such economic policies could lead to a contraction in liquidity, affecting the flow of capital into alternative investments like cryptocurrencies.
Meanwhile, the Federal Reserve is closely monitoring how changes in immigration and trade policies might influence inflation targets. In December, Fed officials expressed concerns that under Trump's new policies, controlling inflation to meet the 2% target could become more challenging, which in turn might delay anticipated interest rate cuts that have previously bolstered Bitcoin's value.
Before this significant drop, Bitcoin had managed to recover from earlier losses in the week, which were triggered by China's DeepSeek affecting tech markets. The cryptocurrency had come tantalizingly close to its all-time high of $108,780, achieved during Trump's inauguration on January 20th. However, the market sentiment shifted with the tariff news, leading to a broader market sell-off. Major indices like the S&P 500, Nasdaq Composite, and the Dow Jones Industrial Average all recorded declines, with the latter dropping by 338 points.
The crypto market felt the ripple effects too beyond just Bitcoin; other cryptocurrencies also experienced significant movements. XRP saw a 3% drop to $3.04, while Solana experienced over a 4% decrease to $230. In contrast, Ethereum managed a 2% increase over the same period, reaching $3,315.