Trade war escalates crypto market downturn amid President Trump's new tariff announcement

The cryptocurrency market extended its decline on Monday, stretching its market capitalization loss to $250 billion since the US slapped tariffs on international trading partners. The market looks set for further downside pressure as President Donald Trump threatened to add an extra 50% levy on China.

Bitcoin, crypto market dips further as trade war intensifies

The crypto market witnessed a rough start to the week as markets opened with huge losses before a slight recovery.

Bitcoin (BTC) briefly dropped below $80,000 to $74,000, with several top altcoins hitting multi-year lows, per CoinGecko data. This includes Ethereum (ETH), which declined below $1,500, a level not seen since March 2023. Solana briefly (SOL) plunged below $100 for the first time since January 2024.

The recent decline has stretched the total crypto market cap loss to over $250 billion since Trump's tariff began last Wednesday. The market is now down over 30% from its peak of $3.9 trillion in December.

Liquidations also increased across top cryptos in the derivatives market, with Bitcoin and Ethereum seeing combined liquidated positions worth $640 million in the past 24 hours, per Coinglass data.

"While US equities were already under heavy pressure last week, BTC largely weathered the storm over the weekend. However, that resilience proved short-lived," noted QCP analysts in Monday's update.

The move highlights that the crypto market has resumed its correlation with stocks.

The sustained losses across crypto and stocks stem from President Donald Trump's announcement that the US would impose an extra 50% tariff on China. This adds to the previous 54% tariffs placed on the country, now at a total of 104%. President Trump said the new tariff would go live if China refused to drop its 34% levy on US goods by April 8.

China stated it would fight "to the end" regarding tariffs, signaling that the market could begin to expect further volatility, according to CNBC.

While the announcement sparked further negativity in the market, a fake news headline about Trump pausing tariffs for 30 days sparked a brief rally in both crypto and stocks. The S&P 500 rose by 400 points in a matter of minutes, and Bitcoin quickly rallied toward the $80K level. However, White House officials denied the news, sending markets down again — but above their intraday lows.

"Today, investors displayed how EAGER capital is to rotate back into the market," wrote The Kobeissi Letters analysts in an X post on Monday.

However, the analysts cautioned that market sentiment could plunge lower if the US and China fail to reach an agreement before April 9.