Bitcoin’s price dropped by nearly 10 per cent on Monday, as growing trade tensions and uncertainty surrounding the establishment of a U.S. cryptocurrency reserve fund led investors to retreat from risk.
Initially, Bitcoin and other digital assets surged following U.S. President Donald Trump’s remarks about creating a national cryptocurrency reserve. However, concerns over the feasibility of the plan soon triggered a sharp decline.
Late in the day, Bitcoin was down 9.47 percent at $85,321.69 each. The cryptocurrency market’s total valuation remains above a trillion dollars, with Bitcoin holding the largest share.
Ether, the second-largest digital asset, experienced a decline of over 15 per cent, while other major cryptocurrencies like XRP, Cardano, and Solana dropped nearly 20 per cent.
“Everything is getting sold. There’s a de-risking that’s unfolding among crypto investors,” said Forexlive manager Adam Button.
What’s the hype about Donald Trump’s crypto reserve?
Trump said that his executive order on digital assets, issued in January, would establish a reserve of various cryptocurrencies, including Bitcoin, Ether, XRP, Solana, and Cardano—names that had not been disclosed earlier.
He emphasized that Bitcoin and Ether would be central to this reserve. In a post on Sunday, his remarks led to a 20% surge in Bitcoin from its November lows. The cryptocurrency had been declining since mid-January amid concerns that Trump had not fulfilled his promises to ease regulations.
The downturn in crypto prices was influenced by Trump’s announcement of a 25 per cent tariff on all imports from Mexico and Canada, both of which have vowed to retaliate.
Cryptocurrency prices surged early Monday after Trump mentioned five digital assets the previous day as potential candidates for a national strategic reserve fund.
Button believes that fears surrounding the trade war are intensified by concerns over US economic growth, which many expect to slow in the first quarter.
Despite this, Trump’s pledge to establish a strategic reserve has sparked enthusiasm within the crypto industry, which has been struggling in recent weeks.
In February, Bitcoin dropped over 17 per cent, marking its steepest monthly decline since June 2022. Since reaching a peak of $105,000 in early January, it has lost more than a third of its value.
Bitcoin’s surge following Trump’s November election victory was driven by optimism that he would support a strategic Bitcoin fund and put an end to former President Joe Biden’s regulatory crackdown.
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