For the first time since January 27, Bitcoin’s value has dipped below the critical $100,000 level, largely due to recent import tariffs imposed by President Donald Trump on goods from Canada, Mexico, and China. This bold move has prompted swift retaliatory measures from all three countries.
Impact of Tariffs on the Cryptocurrency Market
The introduction of these tariffs has sparked considerable debate in the cryptocurrency community, with mixed opinions on their potential ramifications for the market as a whole. On February 1, the White House announced an additional 25% tariff on imports from both Canada and Mexico, as well as a 10% tariff on Chinese goods. Notably, energy resources from Canada received a slightly lower tariff of 10%.
According to the White House’s rationale, these tariffs are part of a broader initiative to hold Mexico, Canada, and China accountable for their obligations to reduce illegal immigration and stop the flow of dangerous substances like fentanyl into the United States.
Responses from Affected Nations
As these tariffs take effect, the likelihood of rising inflation becomes more pronounced, which could lead to increased interest rates. In times like these, investors often pivot towards safer assets, such as bonds and fixed deposits, instead of risking their money in more volatile markets like cryptocurrencies.
In reaction to this tariff announcement, Canadian Prime Minister Justin Trudeau stated that Canada would respond with a 25% tariff on approximately $106.5 billion worth of American products. Meanwhile, the Chinese Ministry of Commerce revealed plans to file a complaint with the World Trade Organization and hinted at launching counteractions against the U.S. tariffs.
Mexican President Claudia Sheinbaum also voiced her response on social media, declaring her intention to activate a “Plan B” through her Secretary of Economy, which would involve both tariff and non-tariff strategies to safeguard Mexico’s economic interests.
Market Reactions and Expert Opinions
These escalating international tensions contributed to Bitcoin’s value dropping to $99,111, with current trading figures reflecting a slight recovery to $99,540, as reported by CoinMarketCap. CoinGlass noted the liquidation of approximately $22.70 million in long positions leading up to this report.
The cryptocurrency sector remains divided on the impact of the tariffs. Dan Gambardello, founder of Crypto Capital Venture, rejected the notion that Trump’s tariffs signal the end of the cryptocurrency bull market, expressing disbelief in this prevailing theory. On the other hand, Jeff Park, head of alpha strategies at Bitwise Invest, highlighted the potential long-term advantages a sustained tariff conflict could bring to Bitcoin. However, not all experts concurred. Adam Cochran, a partner at Cinnaeamhain Ventures, pointed out that Bitcoin is closely linked to global market trends, often reflecting movements in technology stocks. He warned that the economic pressures stemming from these tariffs could lead to broader financial challenges across the market.
Source: Cointelegraph
