TLDR
- By pausing tariffs on its neighbors, Trump's decision helped the crypto markets swiftly regain ground after a significant drop wiped out a $10 billion valuation.
- Ethereum took a dive to $2,135, only to bounce back to $2,881, while major futures players saw more than $600 million in losses.
- Solana showed remarkable tenacity, climbing 13.5% to reach $216 after slipping to $190.
- Backed by the Trump family, World Liberty Finance moved $60 million to Coinbase Prime in strategic transfers.
- Both Canada and Mexico pledged stronger border controls as part of the tariff suspension agreements.
President Trump's tariff pause concerning Canada and Mexico prompted a robust revival in crypto markets, rebounding after a weekend slump that knocked off $10 billion in market valuation. This resurgence followed North America's commitment to tightening border security.
The initial downturn in crypto markets began when Trump hinted at potential tariffs against major trading partners, causing Bitcoin to fall from nearly $105,000 to $92,000, while Ethereum tumbled 18% to $2,135 during the Asian trading session.
Ethereum witnessed its biggest one-day fall since May 2021, as this downturn led to over $600 million in futures positions being erased, aiding a collective $2.2 billion in crypto derivatives losses market-wide.
Demonstrating robust recovery potential, Solana climbing 13.5% to $216 bounced back strongly from its low of $190, with a rise in trading volumes reaching 27% during the day. This highlights renewed interest in both meme coins and the decentralized finance offered by the platform.
The market's rebound commenced after Mexico and the U.S. came to a resolution. Mexican President Claudia Sheinbaum committed to deploying 10,000 troops to the U.S. border to fight illegal drugs and unauthorized migration.
Following suit, Canadian Prime Minister Justin Trudeau brokered a similar tariff pause for at least a month. Canada's plan included a hefty $1.3 billion investment in border enhancements and a possible creation of a 'Fentanyl Czar'.
Eric Trump's social media buzz had a palpable effect on market sentiment. A post on Ethereum surfaced, stating, 'Now might be an opportune moment to invest in ETH'. It's notable that a follow-up sentence 'Feel free to thank me later.' was removed from the post's history.
In my opinion, it’s a great time to add $ETH .
— Eric Trump (@EricTrump) February 3, 2025
World Liberty Finance, with Trump family ties, took decisive action as markets regained strength. The Gnosis Safe Proxy managed by the project executed trades totaling around $60 million, comprised mainly of $55.69 million in Ethereum and $5 million in USDC routed to Coinbase Prime.
Bernstein analysts labeled recent market selling as routine activity. They emphasized that cryptocurrencies face short-term risks given their tie to risk-on assets and potential tariff impacts on costs and currency value.
Any tariffs proposed would lead to increased prices for U.S. consumers on multiple goods, from gas to cars made within North America, while items from China would also see a price hike.
House Democrat Leader Hakeem Jeffries criticized the tariff plans, labeling it a 'Republican ploy' that could raise basic goods' prices, thus burdening citizens. Some economists believe tariffs are typically borne by U.S. consumers rather than by the foreign entities.
The resurgence in markets highlighted the nuanced relationship between crypto markets and international trade regulations. Bitcoin climbed back to trading above $100,000, hitting $101,731 after its earlier dip to $92,000. Ethereum found stability at around $2,880 after briefly dropping to $2,451.
Presto Research’s Min Jung pointed out that tokens like SOL and XRP spearheaded the recovery, with AI-related tokens also bouncing back. The pause on tariffs offered a lift for SOL's market performance.
Ben Zhou, Bybit's CEO, proposed that the total liquidation numbers might not fully reflect the shakeout due to limitations in exchange API data. The overall impact might be greater than what’s currently reported.
The latest blockchain data via Arkham shows that World Liberty Finance's most substantial transfer was priced at an impressive $28 million.
