The price of bitcoin fell by almost 10% on Monday as investors fled the market due to the growing trade war and the uncertainty surrounding the establishment of a US cryptocurrency reserve fund.
Bitcoin and related digital assets jumped on US President Donald Trump’s announcement that a national cryptocurrency reserve will be established, but then delved into worries that this would not truly happen.
“Everything is getting sold,” Forexlive manager Adam Button said, adding: “There’s a de-risking that’s unfolding” among crypto investors.
At $85,321.69 per share, Bitcoin was down 9.47 percent at the end of the day. Bitcoin has the highest total valuation in the cryptocurrency space, valued at over a trillion dollars.
The price of ether, the second-largest digital asset, fell by over 15%.
Other well-known cryptocurrencies including Solana, Cardano, and XRP saw declines of almost 20%.
Trump’s announcement of 25% tariffs on all goods coming into the US from Canada or Mexico, both of which have previously threatened to respond, had an impact on cryptocurrency values.
Button thinks that anxieties about US economic growth, which many predict will slow in the first quarter, are making people more anxious about this trade war.
Trump’s announcement the day before that five may be used in a national strategic reserve fund helped to boost cryptocurrency values early Monday.
Trump cited XRP, Cardano, and Solana in addition to bitcoin and ether.
This reserve would be established by bringing in digital currencies that are currently in the US, mostly from assets of people or businesses that are subject to penalties or seizures in court cases.
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.”
