$1.1B Crypto Sell-Off Follows Trump’s Tariff Move and Reserve Proposal

The cryptocurrency industry was shaken significantly in reaction to President Donald Trump’s recently proposed policy changes, causing $1.1 billion to be sold off in just one day. This crash was said to have happened for two main reasons: a 25% import tariff policy launched on Canada and Mexico, and the suggestion of a U.S. Crypto Strategic Reserve. 

On Sunday, through a stroke of a pen, President Trump scored his first tariff on the import of goods from both Canada and Mexico at 25% to protect domestic industries. This sent a shockwave through the global stock market, as investors raised their concerns about slow growth and, at the same time, rising inflationary pressure. 

Cryptocurrencies, considered a game of high stakes, suffered even more. Bitcoin, the most popular of them all, plummeted in just two days from $95,000 on Sunday to $82,400 on Tuesday, an 11% drop. This meant that a total of $125 billion had been wiped off from Bitcoin’s market capitalization, thus losing all the momentum it had gained just days before. 

Introduction of the U.S. Strategic Reserve of Cryptocurrency

President Trump, owing to unexpected events, happened to announce the establishment of the U.S. Crypto Strategic Reserve to the inclusion of major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), XRP (Ripple), Solana (SOL), and Cardano (ADA). The idea is designed not only to make the United States a leader in the domain of global cryptocurrency but also to support financial innovation. 

This announcement sent crypto prices soaring, with Bitcoin up about 20% to hit a high of $94,416 on Monday morning. Likewise, Ethereum rallied about 14% before both cryptos faced deep corrections shortly afterward.

Institutional investor behavior

Data shows that institutional investors are still wary about the uncertain market. Bitcoin Exchange-Traded Funds (ETFs) took in only $3.8 million on Monday. Hence, the suggestion that investors eyed potential bull traps as the announcement about the strategic reserve was troubling in the market environment. This proved to be further proof of the uncertainty in the market.

Market liquidations and investor sentiment.

The rapid sell-offs in the market led to major liquidations. Traders working with long positions in BTC, ETH, SOL, ADA, and XRP sustained aggregate liquidations of $773 million, making 77% of the total losses valued at $1.1 billion within the last 24 hours. The idea points back to traders voting no-confidence against the tariff policy of the administration. 

Conclusion

The convergence of President Trump’s tariff confirmation with a proposed Crypto Strategic Reserve has increased volatility in the cryptocurrency market. Though the basic aim of strategic reserves is to cement US interests in the crypto sector, the immediate market reaction is quite indicative of apprehension among investors and complex dynamics affecting digital assets’ valuations.