Crypto Market Plunges 25% Amid Recession Fears and Trade War Concerns
The crypto market is experiencing a sharp decline this week, driven by growing fears of a trade war and investor disappointment over the U.S. government’s approach to crypto reserves. Market sentiment took another hit after former President Donald Trump suggested in a recent interview that a recession could be on the horizon.
Bitcoin (BTC) has dropped over 4% in the past 24 hours, nearing $79,000—a level not seen since mid-November. Ethereum (ETH) has taken a steeper hit, falling 10% to $1,860, its lowest since August. Other major cryptocurrencies, including XRP, Solana (SOL), and Cardano (ADA), are also struggling as investors pull back from riskier assets.
Adding to the market turbulence, the incoming Trump administration's aggressive tariff policies on Canada, China, and Mexico are fueling concerns about a potential trade war. Higher tariffs could drive up inflation and import costs, prompting investors to seek safer alternatives rather than the volatile crypto market.
During a weekend interview with Fox News, Trump acknowledged that his tariff strategy could lead to a recession, calling the current economic climate a "period of transition." His comments rattled investors further, especially as he did not rule out an economic downturn this year. Wintermute OTC trader Jake Ostrovskis noted that Trump’s warning of “short-term economic pain” has intensified market anxiety.
Investor sentiment was further dampened by the U.S. government’s announcement that it will only retain cryptocurrency seized from illicit activities, rather than actively accumulating Bitcoin reserves. OKX global CMO Haider Rafique expressed disappointment, stating, “While establishing a Bitcoin reserve is a significant milestone, it does not create immediate buying pressure, disappointing those expecting aggressive accumulation.”
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