Recent tariff increases in the U.S. have caused significant declines in global financial markets, including the cryptocurrency market. This article explores the main causes and effects of these changes.
Market Collapse
According to CoinGecko data, the total cryptocurrency market capitalization dropped by 9.7% in the past 24 hours, shrinking to $2.53 trillion. Bitcoin (BTC) briefly fell below the $77,000 mark, while Ethereum (ETH) plunged below $1,500.
Traditional financial markets also suffered significant losses:
- U.S. stocks plummeted, with the S&P 500 recording its largest single-day drop since the pandemic, wiping out approximately $5.4 trillion in market capitalization. - Global markets were also affected: the Japanese stock market triggered circuit breakers, South Korea’s KOSPI index dropped 7%, and the Hang Seng Index lost more than 1,100 points in a single day, leading to a total loss of $6.6 trillion globally.
Dollar System Capital Flows
The dollar-dominated system governs current global economic and financial flows. This enables the dollar to be used for nearly any purchase around the world, creating significant bilateral trade flows.
The dollar system has deeply penetrated all corners of business and commerce, due to high rates of financial liberalization and unrestricted capital mobility.
Among the measures taken in response to tariff changes, significant actions include:
- An increase in mid- and long-term Treasury issuance in the U.S. - Stricter oversight of cross-border capital transactions.
Cryptocurrency Market Outlook
Despite the uncertain conditions, the cryptocurrency market continues to attract certain investors. As of now, the number of Bitcoin-holding addresses has reached a record high of 54.71 million.
Significant growth in Ethereum transaction volumes indicates that over 50% of large transactions are conducted without centralized exchanges. Additionally, cryptocurrency markets in Switzerland, Singapore, and the UAE reported net capital inflows rising over 60%, suggesting a shift towards institutional investment in digital assets.
Amid escalating trade tensions and economic uncertainty, the cryptocurrency market demonstrates resilience and a need for adapting investment hedging strategies. Both cryptocurrencies and traditional assets face changes that may impact their dynamics moving forward.
