Bitcoin falls below $90,000 influenced by Trump’s tariff on Mexico and Canada

The world’s famous cryptocurrency, Bitcoin, has experienced a major drop, falling below $90,000 as of Tuesday morning. The crash has been attributed to reports of U.S. President Donald Trump’s tariffs against Mexico and Canada, triggering a sell-off in the crypto markets.

This decline showed how strong the U.S. President’s tariff can influence the crypto world as Bitcoin continues to react strongly to macroeconomic events.

As of press time, Bitcoin trades at $89,545. The world’s leading asset has fallen by 4.5 per cent in the last 24 hours having reached its lowest of $91,000 which was recorded in November 2024. 

The drop also comes about a month after Bitcoin hit a new record hours before President-elect Donald Trump’s inauguration on January 20. The cryptocurrency surged over $109,000 and pumped up after Donald Trump said he’ll take action on his promises to the crypto industry once he assumes office. 

However, the latest price fall reflects a broader crypto market decline, with the total market capitalization shedding 8 per cent, sliding from over $3.31 trillion to approximately $3.09 trillion.

Other cryptocurrencies saw significant losses with Ethereum (ETH) dropping by 8.5 per cent to less than $2,500, while XRP lost 9 per cent of its value to trade at $2.25. Several speculative assets experienced intensified selling pressure, leading to forced exits by traders and investors.

Also in the industry, meme coins faced a sharp decline amid growing concerns about their sustainability and future performance. 

Solana, a major hub for memecoin activity, has dipped about $50 billion in market value over the past month. Experts suggest the fallout of the Libra memecoin scandal involving Argentinian President Javier Milei. Official Trump (TRUMP), the top Solana coin backed by US President Donald Trump, also dropped by over 75 per cent from its peak.

As a result of the price and activity decline, $1.72 billion worth of SOL is set to be unlocked on March 1 which is targeted at increasing selling pressure as new supply enters the market.

Also Read: South African politician warns against use of Bitcoin for strategic reserve.

Trump’s tariff influence

In his reaction, President Trump stated that the US was ‘on time with the tariffs’ on Canada and Mexico, noting that the U.S. had been mistreated by its neighbours and allies.

“We’re on time with the tariffs, and it seems like that’s moving along very rapidly…We’ve been mistreated very badly by many countries, not just Canada and Mexico. We’ve been taken advantage of,” Reuters reported, citing Trump at the White House. 

The result saw President Trump imposing a 25 per cent tariff on imports from Canada and Mexico. James CryptoGuru, a popular crypto analyst on X, highlighted that Trump has wiped out up to $734 billion of the crypto market since his second term commenced on January 20.

The report claimed that the reaction followed inquiries on whether tariffs would be placed on Canadian and Mexican goods once the agreed deadline for a pause arrives next week. 

Data from Coinglass revealed that the crash resulted in nearly $1 billion in total liquidations across the crypto industry. Earlier this month, over $2 billion was wiped out from the crypto market, causing a historic liquidation event.

This also poses more confusion for crypto investors who have been positively anticipating the incoming Trump administration which they believe holds promises to usher in a friendlier regulatory environment, boosting sentiment around the alternate currency. 

During his campaign, Trump promised to create a U.S. crypto stockpile and an industry-friendly regulation.

Bitcoin volatility fuels strategic reserve’s doubts

In light of this, the new strategic fall has further placed a hue on the use of Bitcoin as a strategic currency.  

Recall that South Africa’s Democratic Alliance Federal Chair, Helen Zille recently warned the country’s government against the use of Bitcoin as a strategic reserve. She claimed the recent wave of countries adopting cryptocurrency as a national treasury. 

Raising the caution at a crypto conference tagged “Adopting Bitcoin” in Cape Town, Zille who admitted to personally investing in the digital assets said she is more concerned about Bitcoin being used as a reserve currency, an idea that has gained favour in the US following the election of Donald Trump as president.

Against the backdrop, El Salvador has witnessed a significant turnaround in its debt reduction since its adoption of Bitcoin as a strategic reserve currency. 

Zille described the steps taken by El Salvador as “important experiments” but warned that there are many risk factors South Africa’s financial regulators must consider before making such a decision.

Describing its reserve as volatile, the South African Reserve Bank said its strategic reserve is a “collection of assets that are managed to help the country prepare for economic crises, natural disaster, and conflict”. The assets include gold, foreign exchange, “special drawing rights” and forex deposits.

India also announced it is reviewing its strict position on cryptocurrencies which might see its consideration on its usage and acceptance. 

The country which has always had a strict position on digital assets is making insights into the cryptocurrency discussion papers. This is not far-fetched as Indians have poured money into cryptocurrencies in recent years.