New York (AFP) – Bitcoin’s price plunged nearly 10 percent on Monday as an escalating trade war and uncertainty over the creation of a US crypto reserve fund sent investors running from risk. After jumping on US President Donald Trump’s talk of creating a national cryptocurrency reserve, bitcoin and similar digital assets dove in the face of concerns it might not actually happen.
“Everything is getting sold,” Forexlive manager Adam Button said, adding: “There’s a de-risking that’s unfolding” among crypto investors. Late in the day, Bitcoin was down 9.47 percent at $85,321.69 each. There is more than a trillion dollars worth of bitcoin in the largest overall valuation in the crypto realm. The second largest digital asset, ether, saw its price drop more than 15 percent. Other major cryptocurrencies such as XRP, Cardano, and Solana were down by almost 20 percent.
Weighing on cryptocurrency prices was Trump’s confirmation of 25 percent tariffs on all products imported to the United States from Mexico or Canada, which have already promised to retaliate. Button believes that concern about this trade war is compounded by worries about US economic growth, which many see weakening in the first quarter.
Cryptocurrency prices had climbed early Monday, buoyed by Trump the previous day naming five that could be used in a national strategic reserve fund. Along with bitcoin and ether, Trump mentioned XRP, Cardano, and Solana. This reserve would be created by bringing in digital currencies already in US possession, mainly from seizures in court cases or assets of individuals or companies under sanctions.
Some in the industry have expressed reservations about the array of currencies considered. The chief executive of leading US cryptocurrency exchange Coinbase felt that limiting the reserve’s holdings to bitcoin “would probably be the best option.” “It’s the simplest and there’s the idea that it could be a successor to gold,” Coinbase CEO Brian Armstrong said in a message posted on X.
After Trump talked up the idea of a cryptocurrency reserve, “everyone started buying, then wondered if it was really going to happen,” Button said. Creation of such a reserve would have to go through the US Congress. “It’s one thing to tweet about it, but you need to pass legislation to make this happen,” Button said. “And that’s still a long shot.”
© 2024 AFP
