Bitcoin’s value took a significant hit on Monday, plunging nearly 10%, as a worsening trade war and doubts over the creation of a US cryptocurrency reserve fund triggered a wave of investor sell-offs.
Initially boosted by President Donald Trump’s suggestion of a national crypto reserve, Bitcoin and other digital assets suffered a sharp decline as concerns grew that the proposal might never materialize.
“There’s a de-risking unfolding among crypto investors,” said Adam Button, manager at Forexlive. “Everything is getting sold.”
By the end of the day, Bitcoin had fallen by 9.47%, trading at $85,321.69 per coin. Despite this drop, Bitcoin’s total market value remains above one trillion dollars, maintaining its position as the largest cryptocurrency.
Ether, the second-largest digital currency, saw an even steeper decline, falling more than 15%. Other prominent cryptocurrencies, including XRP, Cardano, and Solana, dropped by almost 20%.
The uncertainty was further exacerbated by Trump’s announcement of a 25% tariff on all imports from Mexico and Canada, both of which have pledged retaliatory measures.
Button believes the escalating trade tensions, coupled with fears of a slowdown in US economic growth in the first quarter, contributed to the market’s nervousness.
Earlier on Monday, cryptocurrency prices had surged following Trump’s mention of a national strategic reserve that could include Bitcoin, Ether, XRP, Cardano, and Solana. This reserve would be funded by digital assets already in US possession, primarily seized through legal actions or from sanctioned individuals or entities.
However, some industry figures, including Brian Armstrong, CEO of Coinbase, expressed skepticism. Armstrong argued that limiting the reserve to Bitcoin would be a simpler and more effective option, given Bitcoin’s potential as a “successor to gold.”
“After Trump’s announcement, everyone started buying, but then began to wonder whether it would actually happen,” Button said.
To establish such a reserve, US Congress would need to pass legislation, which Button cautioned could be a long shot.
“It’s one thing to tweet about it, but passing legislation is a whole different challenge,” he added.
