Cryptocurrency prices dropped due to trade war fears and investor anxiety
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Cryptocurrency prices slid on Feb 3 as the spectre of a global trade war put investors on edge and pushed them out of risky assets.
Bitcoin, the world’s biggest and best-known crypto, fell to US$94,476.18, touching a three-week low of around US$91,441.89. Smaller cryptocurrency Ether plunged 24 per cent, back to levels last seen in early September. It last fetched US$2,494.33.
The selling in so-called alternative coins was more acute. Dogecoin, which includes Elon Musk as a backer, fell around 14 per cent, bringing it down 45 per cent from the high it reached on Dec 8y. XRP, Cardano, Avalanche and Chainlink, all altcoins, each fell more than 10 per cent.
Over the weekend, US President Donald Trump imposed 25 per cent tariffs on Mexican and most Canadian imports, and 10 per cent on goods from China, to kick in on Feb 4.
Cryptocurrencies trade around the clock, including on weekends, and have lately been sensitive to markets’ broader sentiment.
Investors think tariffs can hurt growth and company earnings.
“Crypto is really the only way to express risk over the weekend, and on news like this crypto resorts to a risk proxy,” said Mr Chris Weston, head of research at Pepperstone.
At the same time, there is added downward pressure on crypto after a strong rally in the wake of Mr Trump’s election, as some investors have felt disappointed at the lack of immediate moves to boost crypto or loosen regulations since he took office.
Bitcoin touched a record high of US$107,071.86 on Jan 20, when Mr Trump was sworn in as the 47th US President and is up 40 per cent since the election in early November in the hopes of crypto-friendly regulations from the Trump administration.
Mr Trump – who once labelled crypto a scam – embraced digital assets during his campaign, promising to make the United States the “crypto capital of the planet.”
Last month, he ordered the creation of a cryptocurrency working group tasked with proposing new digital asset regulations and exploring the creation of a national cryptocurrency stockpile.
