The cryptocurrency market faced a sharp price drop this week following the introduction of new tariffs in the US, negatively affecting investor confidence.
Why US Tariffs Are Tumbling the Crypto Market
The recently implemented US tariffs, targeting critical sectors such as Chinese tech imports and rare earth materials, have created a ripple effect throughout the global financial ecosystem. Historically, the crypto market reacts sharply to macroeconomic uncertainty, and this episode is no different.
As tariffs stoke inflation fears and disrupt global trade, investors tend to move their capital into safer, less volatile assets. This 'risk-off' approach leads to heavy selling in speculative assets like cryptocurrencies. Within 24 hours of the tariffs coming into effect, over $500 million in leveraged long positions were liquidated across major exchanges.
Pressure on Bitcoin and Ethereum—But Not Broken
Bitcoin’s drop below $115,000 is technically significant. While the $120K zone had acted as a psychological barrier for weeks, the recent breakdown hints at further downside unless a reversal builds quickly. Ethereum, too, is feeling the pinch, trading near $3,600 with weak volume support.
On the other hand, the drop was supported by over $680 million in long liquidations, with Ethereum recording the highest. As per the data from Coinglass, more than 180K traders were liquidated, while the total liquidation comes in at $727.29 million.
What to Watch Going Forward
As the markets digest the geopolitical and economic fallout of the U.S. tariff move, traders will be watching two main key factors:
- Can the bulls defend Bitcoin’s key support between $112K and $110K, if the price continues to drop further? - Now that the ETH price is heading close to $3,600, can it hold $3,400 as a drop below this range could trigger steeper declines? - Thirdly, the reaction of the global central bank to any dovish pivot could act as a catalyst for a strong recovery.
The recent U.S. tariffs have undoubtedly rattled the crypto market, triggering short-term pain. However, if inflation fears intensify and fiat currencies weaken, Bitcoin and other digital assets could see renewed interest as safe-haven plays.
The cryptocurrency market continues to face high volatility amid new U.S. tariffs. Investors should remain cautious and monitor key support levels that may play a crucial role in the further development of the situation.
