Watch @jessepollak & @iampaulgrewal discuss US crypto policy and what we can expect next.https://t.co/20lrFVTSXh
— Coinbase 🛡️ (@coinbase) January 30, 2025
Bitcoin has slipped for the third consecutive day as Canada’s Prime Minister Justin Trudeau retaliated against U.S. tariffs imposed by President Trump. The renewed trade war, coupled with mass deportations of illegal migrants, is seen as potential contributors to global inflation, reflecting fears in BTC’s market performance. BTC, the leading cryptocurrency by market value and the only macro asset open for trading over the weekend, held below $100,000, trading weak for the third straight day.
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— Coinbase 🛡️ (@coinbase) January 30, 2025
Prime Minister Trudeau announced that Canada would impose 25% tariffs on U.S. goods, ranging from drinks to appliances, in response to the U.S. placing a 25% tariff on Canadian and Mexican imports and a 10% tariff on goods from China. In response, China stated it would file a case against the U.S. at the World Trade Organization and vowed unspecified countermeasures to safeguard its interests. The BTC’s price weakness likely reflects these geopolitical concerns and offers risk-off cues to traditional risky assets.
The broader crypto market followed BTC lower.
Unpopular opinion:
You need bitcoin more than bitcoin needs you. 🤷♂️
— CZ 🔶 BNB (@cz_binance) February 2, 2025
Omkar Godbole, Co-Managing Editor on CoinDesk’s Markets team, noted that the renewed trade war and mass deportations are weakening the case for speedy Federal Reserve rate cuts. Godbole, who holds a master’s degree in Finance and is a Chartered Market Technician (CMT) member, has experience in writing research on currency markets and fundamental analysis at brokerage houses in Mumbai.
In summary, Bitcoin’s recent decline can be attributed to the escalating trade tensions and economic policies, reflecting the uncertainty in the global market. Virtual assets are experiencing a notable decline as the Trump administration pushes forward with new tariffs. On the morning of February 2, data from CoinMarketCap, a global coin market relay site, indicated that Ripple plunged more than 6% in the past 24 hours, dropping to $2.86.
Bitcoin was also trading lower, at $10,675, down 1.72% from the previous day. Ripple had been rallying close to $3 as the market anticipated the Trump administration would remove various regulations on cryptocurrencies. However, the currency’s value dropped significantly following the administration’s renewed push for tariffs.
The expected tariffs are likely to lead to increased import prices, thereby raising inflationary pressures in the United States.
Bitcoin struggles amid tariff tensions
Higher inflation could diminish the likelihood of interest rate cuts, which has further added to market volatility.
There was some initial speculation that the imposition of tariffs would be postponed until March 1, as there were processes in place to allow countries to request exemptions for certain exports. However, these reports were dismissed by the White House as “false.” Trump’s press secretary, Caroline Levitt, confirmed that the tariffs, including an additional 10% tariff on China, would take effect February 1. The administration is also pushing for further tariffs of 25% on Canada and Mexico, along with 10% on China.
This tariff imposition has not only affected Ripple but has also led to a broader decline across various cryptocurrencies. For one, the dramatic shift in tariff policy is expected to introduce economic uncertainty and potentially destabilize both traditional and digital asset markets. As tariffs rise, the cost of importing goods into other nations escalates, resulting in decreased imports, which benefits domestic enterprises.
The consequence for consumers is that total living expenses will more than double due to rising goods prices under stagnant demand, leading to inflation. Imposing tariffs may lead to trade disputes, resulting in economic uncertainty. Some analysts suggest that the growing correlation between the S&P 500 and cryptocurrencies indicates that digital asset markets will likely experience volatility similar to that of traditional markets.
In particular, cryptocurrencies are increasingly being treated more like risk-on assets, with their values often rising and falling alongside traditional financial markets. AI-based predictions for February suggest that prices will drop. The next crucial event for the industry will be the FOMC meeting in March.
Here are some specific predictions:
– SOL could go down due to potential regulatory actions by the SEC. – HBAR is projected to be at 0.28. Disclaimer: This article includes third-party opinions and does not constitute financial advice.
