Ether, Memecoins Plunge as Traders Dump Risk After Trump Tariffs

Link copied

Ether, Memecoins Plunge as Traders Dump Risk After Trump Tariffs

crypto :: 7hrs ago :: source - bloomberg

By Suvashree Ghosh, Richard Henderson and Sidhartha Shukla

(Pixabay)

(Bloomberg) -- Donald Trump’s moves to impose tariffs on major US trading partners sparked a selloff in cryptocurrency markets, with an index of smaller tokens on track for the steepest two-day rout in almost three years.

Most Read from Bloomberg

The MVIS CryptoCompare Small-Cap index slumped as much as 21% on Monday, adding to the previous day’s 11% drop. Ether, the second-biggest cryptocurrency, briefly plunged as much as 27% before paring losses. Bitcoin held up better and was trading down about 1% as of 9:26 a.m. in London.

Stock markets across Asia and Europe also dropped after Trump threatened the European Union with tariffs, which would add to levies already imposed on Canada, Mexico and China.

The deep crypto declines underscore how Trump, the most pro-crypto US president, has added an element of uncertainty for traders. After rallying following Trump’s election in early November, almost all the top digital tokens are now down sharply for the year.

“Trump’s tariff war is impacting the whole market,” said Caroline Bowler, chief executive officer of BTC Markets. “Concerns about trade wars and stagflation, triggering recessions, are cascading across altcoins and Bitcoin.”

The MVIS CryptoCompare Small-Cap’s two-day drop was the steepest since May 2022, when the implosion of the TerraUSD stablecoin roiled crypto markets, data compiled by Bloomberg show.

Crypto markets have shrugged off moves Trump has made since his inauguration to support the industry. The Republican signed an executive order on Jan. 24 that created a working group expected to deliver clear rules for US crypto firms within six months. The group is also charged with examining the creation of a crypto stockpile.

Despite optimism about Trump’s plans, his tariff announcements over the weekend “saw a strong bid for downside on Saturday and Sunday as hedges on larger global macro ramifications,” said Sean McNulty, head of APAC derivatives at digital-asset prime brokerage FalconX. For now, Bitcoin is bearing the selloff better than smaller, more speculative tokens, he added.

In derivatives markets, more than $2.2 billion of bullish crypto positions were liquidated over a 24-hour period, CoinGlass said in an X post on Monday, describing it as the “biggest crypto crash.”

“The risk of a protracted trade war with China, in addition to US allies, does not bode well for the volatile and rate dependent digital asset space,” said Sean Dawson, head of research at crypto trading platform Derive.xyz. He added that Ether may find support at $1,900 to $2,000, with options markets “giving a 25% chance ETH hits $2,000 before the end of the month.”

Ether was trading at around $2,600 on Monday morning in London.

The crypto market’s total value slid by about $360 billion on Monday, according to CoinGecko data, while memecoins launched in recent weeks by Trump and his wife Melania were also caught up in the selloff, trading about 75% and 90% below their respective peaks.

(Updates with small-cap performance in second paragraph.)