Get ready for a wild ride! Stock markets are braced for extreme swings due to the crypto market's weekend slump.
In just one day, approximately $2.2 billion was wiped out, a stunning culmination from Trump's tariffs targeting imports from multiple countries, reports Coinglass. cryptocurrency market Bitcoin, the dominant force among cryptocurrencies, took a nosedive to $92,500 late Sunday according to CoinMarketCap, struggling to maintain its footing above $100,000 after the tariff shockwaves. It's hovering around $93,000 now, reflecting a 6.5% drop in the past day.
OMG!
While Bitcoin faltered, its decline was overshadowed by even larger losses among other digital currencies. During this period, Ethereum, Solana, and many altcoins suffered double-digit losses.
Cryptocurrencies like Ethereum crashed 24%, Cardano plunged 25%, while Binance Coin and Solana each took a 15% hit. The entire crypto market's valuation shrunk drastically by 10% to $3 trillion.
Ethereum (ETH) plummeted 20% to $2,400, while XRP and Dogecoin (DOGE) This significant plunge is marked as the largest single-day wipeout in the history of cryptocurrencies, surpassing previous downturns seen during the COVID-19 pandemic and FTX's collapse.
Coinglass indicates the downturn triggered unprecedented liquidations in the crypto derivatives market, with over a whopping $1.8 billion in long positions vanquished and $345 million in short positions taken out.
Recently, Ether endured the gravest losses, facing an eye-watering $603 million in liquidations in one day. Bitcoin followed closely with $407 million, and various altcoins collectively faced $435 million in liquidations. Ripple lost $115 million, with Solana and Dogecoin each seeing losses of $85 million and $83 million.
Trump's newly unveiled tariffs bring fresh fears of inflation.
On February 1st, Trump laid down new import tariffs aimed at Canada, Mexico, and China, expected to come into force by February 4th. This includes a 25% tariff on goods from North America, while Chinese imports face a 10% levy.
Trump asserted that these tariffs are crucial to battle illegal immigration and combat drug trade, which he insists is a national crisis.
Exemptions to these tariffs are in place for Canadian energy resources, which will only be subjected to a reduced 10% tariff, while goods already en route at the time of this announcement are not impacted.
However, many economists caution that these tariff actions by Trump could spark inflation across several industries, including automotive and food. Businesses might pass on these additional costs to consumers, ultimately driving inflation.
Following a series of rate reductions last year, the Federal Reserve held interest rates steady within the 4.25% to 4.5% range during their meeting in January 2025. Chairman Jerome Powell indicated that the Fed is not rushing to lower rates further as the economy and labor market remain resilient.
Latest figures show U.S. inflation rising to 2.9% annually for the year ending in December 2024, up from 2.7% in the prior month, indicating a steady rise over three months.
Despite persistently low unemployment, the Fed remains vigilant against making further rate cuts that could worsen inflationary trends.
Canada and Mexico have announced retaliatory measures in reaction to Trump’s new tariffs. Justin Trudeau, the Canadian Prime Minister, revealed plans for 25% tariffs on around $155 billion worth of U.S. exports.
Mexican President Claudia Sheinbaum is also preparing counter-tariffs, though the full details and specific products affected are yet to be disclosed.
Investors globally are steeling themselves for a volatile Monday as they measure the potential impact of Trump's tariff policy. As trading kicked off, the U.S. dollar gained strength while the Canadian dollar and Mexican peso weakened.
Nicholas Say, who hails from Ann Arbor, Michigan, has explored the world extensively, having lived in Uruguay for several years. Currently based in the Far East, his writings prominently focus on advancing realistic development and the future of human technology.
