Crypto Market Sheds $2.7T Gains as XRP, DOGE Lead Sell-Off Amid Trump’s Tariff Move
The cryptocurrency market took a sharp downturn on Friday, wiping out all gains since Donald Trump’s election victory in early November, as renewed U.S. tariffs on China rattled global markets.
Market Overview:
XRP and Dogecoin (DOGE) led the sell-off among major cryptocurrencies, plunging over 10% after Trump confirmed new 10% tariffs on Chinese imports. Bitcoin (BTC) tumbled 7%, briefly dipping below $79,000—its lowest level since November—bringing its total decline to nearly 30% from its January peak above $108,000. Ether (ETH), Cardano (ADA), and Binance Coin (BNB) also saw significant drops, each sliding at least 9%.
As a result, the total cryptocurrency market capitalization fell 8% to $2.7 trillion, erasing all the progress made since Trump’s election win. The CoinDesk 20 Index (CD20), which tracks the broader market, declined nearly 9%.
Stock Market Turbulence and Crypto Correlation:
Despite strong earnings from Nvidia earlier in the week, global equities slumped under the weight of renewed trade war fears, a slowing economy, and overextended market positioning. Crypto traders pointed to Bitcoin’s strong correlation with the S&P 500 as a key factor in its recent decline.
“Year-to-date, altcoins and overall sentiment have struggled, largely due to liquidity being drained from the memecoin frenzy and ETF-related Bitcoin selling, which hit record levels last week,” said Augustine Fan, head of insights at SignalPlus, in a Telegram message to CoinDesk.
China’s Market Woes and Crypto Implications:
Friday’s sell-off coincided with a sharp decline in Chinese stocks following Trump’s tariff announcement. With China already grappling with an ongoing property crisis and deflationary pressures, these tariffs add further uncertainty to its economic outlook.
The timing is crucial, as China’s annual National People’s Congress meeting is set to begin next week, where officials will outline economic strategies and growth targets. Any government stimulus or market-boosting measures could influence Bitcoin and broader crypto prices, making it a key event to watch.
Bearish Sentiment Persists in Bitcoin Markets:
Until clearer signals emerge, some traders remain cautious.
“Even bullish options traders are capitulating, with implied volatility dropping alongside spot prices as call options are being offloaded in favor of puts,” Fan noted.
Adding to the bearish sentiment is renewed concern over MicroStrategy (MSTR), which fell 10% amid worries about its Bitcoin-backed convertible debt strategy. These risks, combined with worsening technical indicators, suggest that short-term downside pressure on BTC may persist.
