U.S. President-elect Donald Trump and Bitcoin.
Cheney Orr | Dado Ruvic | Reuters
Cryptocurrencies tumbled in a risk-off move after President Donald Trump hit Canada, Mexico and China with long-threatened import tariffs.
The price of bitcoin fell 2% Monday to $95,722.77, down from a price above $102,000 before the weekend, according to Coin Metrics. Ether plunged 12% to around $2,600. It was trading above $3,300 Friday. Smaller cryptocurrencies further out on the risk curve took the biggest hits.
Shares of Coinbase and MicroStrategy lost about 5% each in premarket trading.
The slide began Saturday evening after Trump signed an order imposing 25% tariffs on imports from Mexico and Canada, as well as a 10% duty on China. It accelerated Sunday night. The U.S. does about $1.6 trillion in business with the three countries.
“Bulls are de-leveraging massively at the moment as everyone watches closely to see if we get negotiation or a trade war,” said James Davies, CEO and co-founder at trading platform Crypto Valley Exchange. “But, $110,000 and $120,000 are still the largest call open interest points, so really volatility is the biggest bet being made.”
Jeff Park, Bitwise Asset Management’s head of alpha strategies, said a sustained tariff war will be “amazing” for bitcoin in the long-run due to an eventual weakening of the dollar and U.S. rates.
While many believe bitcoin is a hedge against inflation and uncertainty over the long term, it trades like a risk asset in the short term — and is likely to respond negatively to any uncertainty around the trade war triggered by Trump’s tariffs.
Investors are watching $90,000 as the key support level in bitcoin, and some have warned of an even deeper pullback toward $80,000 should the cryptocurrency meaningfully break below its support.
Bitcoin is about 12% off its Jan. 20 record of $109,350.72. Seasoned crypto investors and traders have become accustomed over the years to corrections of around 30% during bull markets.
