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The cryptocurrency market took a sharp hit on February 1 after President Donald Trump imposed tariffs on key trading partners. Bitcoin dropped by 5%, triggering a broader sell-off across altcoins.
The U.S. has implemented a 25% tariff on imports from Canada and Mexico and a 10% duty on Chinese goods. These measures, effective February 1, add more strain to ongoing trade tensions. In response, investors shifted to a risk-off stance, causing Bitcoin to dip below $91,200 before recovering to around $94,000.
Despite this slight rebound, Bitcoin remains about 13% below its peak of $109,000. Trading volume surged by over 200%, indicating strong selling activity. Meanwhile, the global crypto market cap has fallen nearly 12%, now standing at approximately $3.15 trillion.
Bitcoin’s decline has impacted altcoins, with Ethereum dropping nearly 20% and Ripple losing 22%. Solana fell by 8%, while Binance Coin dropped more than 15%. The increased trading volume alongside falling prices suggests widespread panic selling.
Following President Trump’s inauguration on January 20, Bitcoin and other cryptocurrencies initially saw significant gains. However, the new tariffs and shifting market sentiment have led to a dramatic reversal.
Data from the Bitcoin: Long Term Holder SOPR chart suggests that long-term investors are selling at lower profits—or even at a loss—compared to their purchase price. Such behavior often signals capitulation, a key characteristic of bearish trends.
BitMEX CEO Arthur Hayes and other industry leaders have warned of potential financial instability. If trade tensions persist, the crypto market may face further volatility in the coming weeks.