Crisis: Crypto Market Drops 25% As Recession Fears Grow
This week, trade war fears and disappointment over the US government's crypto reserve plans are causing a major crypto market drop. Investors are more uneasy after President Donald Trump hinted about a recession in a recent interview.
Bitcoin has declined over 4% in 24 hours, approaching 79,000, a level not seen since mid-November. Ethereum (ETH) fell 10% to 1,860, a price not seen since August.
Other established cryptocurrencies like XRP, Solana (SOL), and Cardano (ADA) are all struggling as market players flee riskier assets.
The increased tariffs by the incoming Trump administration on Canada, China, and Mexico are contributing to this volatility.
These steps have raised concerns about a trade war, which might raise inflation and import prices. Investors are avoiding the unpredictable bitcoin sector and opting for safer alternatives.
Trump told Fox News over the weekend that the strong tariff plan might cause a recession, calling the nation in a “period of transition.”
This has alarmed investors, especially because Trump did not rule out a recession this year. Over-the-counter trader Jake Ostrovskis at Wintermute stated that the former president predicted “short-term economic pain,” escalating market fears.
Investors were dismayed when the government said it would only keep cryptocurrency confiscated from unlawful operations.
OKX global chief marketing officer Haider Rafique was disappointed that a Bitcoin reserve would not immediately increase purchasing demand.
Rafique said, “While establishing a Bitcoin reserve is a significant milestone, it does not create immediate buying pressure, disappointing those expecting aggressive accumulation.”
A decline in investor risk appetite is partly behind this crypto market collapse. Since December, when the Federal Reserve said it will not drop interest rates as much in 2025, the crypto market has lost 25% of its market size.
