Photo credit: www.cnbc.com
Bitcoin and other digital currencies faced significant downward pressure following President Donald Trump’s announcement of substantial tariffs, which upset the stock market on Thursday.
The leading cryptocurrency, Bitcoin, saw its value decrease by approximately 5%, settling at $81,479.77, according to data from Coin Metrics. Additionally, Ether experienced a drop of 7%, while Solana’s associated token fell by 13%.
In conjunction with the slump in cryptocurrency prices, the stock market also took a hit, with the S&P 500 index heading toward its largest single-day loss since September 2022. Notably, shares for major firms such as Coinbase and MicroStrategy fell by 9% and 7%, respectively.
The market turmoil was largely driven by Trump’s announcement of new tariffs, which start at 10% and escalate higher for certain nations, heightening concerns about a potential trade war on a global scale.
“Bitcoin operates at the crossroads of narrative, liquidity, and leverage,” explained Ben Kurland, CEO of the cryptocurrency research platform DYOR. “Currently, it resembles a high-beta macro asset that is closely aligned with factors like real yields, interest rate trajectories, and the strength of the dollar.”
Kurland further remarked, “As yields declined and risk assets gained traction, Bitcoin reacted swiftly. The focus isn’t on crypto fundamentals at this moment; rather, it’s driven by global liquidity indicators and market positioning. When real interest rates decrease and the dollar weakens, Bitcoin tends to perform better.”
For the better part of the month, Bitcoin has been trading within the range of $80,000 to $90,000 as investors look to movements within the equities market for guidance, given the absence of a particular catalyst in the cryptocurrency sector.
Despite the challenges, crypto markets have demonstrated a degree of resilience compared to traditional equities. David Hernandez, a crypto investment specialist at 21Shares, emphasized that Bitcoin’s ability to maintain its position above critical technical support levels indicates strong underlying demand.
“While the tariff rates exceeded initial expectations, the announcement has shed light on the breadth and depth of the forthcoming policy,” Hernandez noted. “Markets tend to perform better with certainty, and now that speculation has largely been cleared, institutional investors might find a chance to capitalize on undervalued assets in the upcoming days.”
Don’t miss these cryptocurrency insights from CNBC Pro:
Source
www.cnbc.com