Ether and several major altcoins experienced a significant decline on February 3, 2025, as the cryptocurrency market reacted sharply to the announcement of new tariffs by former President Donald Trump. The tariffs, aimed at imports from China, Canada, and Mexico, triggered a wave of panic selling among investors, leading to double-digit losses across the board.
Key Takeaways
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Ether fell 16% in just one hour, reaching a low of $2,368 before recovering slightly.
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Major altcoins like Cardano, Avalanche, and XRP also saw declines of over 20%.
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The overall cryptocurrency market cap dropped by 11.4%, falling to $3.17 trillion.
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Bitcoin's dominance increased as traders shifted from altcoins to Bitcoin amid rising fears.
Market Reaction to Tariffs
The announcement of tariffs by Trump sent shockwaves through the cryptocurrency market. Ether, the second-largest cryptocurrency by market capitalization, plummeted to $2,368, marking a 16% drop within a single hour. Although it managed to recover to $2,521, it remains down 38% from its 2024 high of $4,078, reached just weeks after Trump's election victory.
Other altcoins were not spared from the downturn. Notable cryptocurrencies such as Avalanche, XRP, Chainlink, and Dogecoin all experienced declines exceeding 20% within 24 hours. This widespread sell-off contributed to a significant reduction in the total market capitalization of cryptocurrencies, which fell to $3.17 trillion, according to CoinGecko data.
Investor Sentiment and Trading Volume
Markus Thielen, founder of 10x Research, noted that the sharp decline in altcoin prices was largely due to a combination of stop-loss triggers and a lack of buying interest from retail investors. He pointed out that trading volumes had been decreasing in the weeks leading up to the tariffs, indicating a waning appetite for risk among investors.
Thielen emphasized that while the market was aware of the potential for tariffs, the extent of their impact had not been fully priced in. Investors had been more focused on other news, leading to a sudden realization of the tariffs' implications.
Broader Market Implications
The fallout from the tariffs was not limited to the cryptocurrency market. U.S. stock futures also took a hit, with the Nasdaq 100 futures dropping nearly 2.7% on the same day. The S&P 500 and Dow Jones Industrial Average futures fell by 2% and 1.5%, respectively, reflecting a broader market pullback.
The Crypto Fear & Greed Index, which measures market sentiment, also showed a significant decline, dropping 16 points into the "Fear" zone with a score of 44 out of 100. This score has not been seen since October 11, indicating a shift in investor sentiment towards caution.
Bitcoin's Resilience
Despite the overall market downturn, Bitcoin managed to limit its losses to 6.8%, trading at $94,743. This relative stability led to an increase in Bitcoin's dominance, rising from approximately 61.1% to as high as 64%. Thielen noted that this trend suggests risk-averse traders are moving their investments from altcoins to Bitcoin, seeking a safer haven amid the uncertainty.
As the market grapples with the implications of Trump's tariffs, investors are left to ponder the potential for prolonged volatility and the need for caution in their trading strategies.
Sources
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Ether, altcoins dive double digits as Trump tariffs take further toll — TradingView News, www.tradingview.com.