In March 2025, President Donald Trump caused a global storm by imposing new tariffs on Canada, Mexico, and China, sending the cryptocurrency market into a free fall. Bitcoin (BTC) plummeted from $95,000 to $86,062 within 24 hours, dragging the entire crypto ecosystem into the red. This tariff storm shook everything from investor confidence to the global economy.
Controversial Tariff Decree in March 2025
On March 1, 2025, Donald Trump issued a bold and controversial tariff decree. With this decision, he imposed a 25% tariff on imports from Canada and Mexico and increased tariffs on goods from China by an additional 10%, bringing the total tariff on Chinese goods to 20%. Trump defended this policy as a strategic weapon to combat fentanyl smuggling and human trafficking across the Canada-Mexico border, along with the influx of illegal drugs from China into the U.S.
The process leading to this decree was tense. On February 1, 2025, Trump signed a preliminary version but delayed it for 30 days to allow Canada and Mexico to implement border control measures. When these countries failed to meet expectations, Trump finalized the decree without leaving room for negotiation. In a White House speech, he strongly stated, “We cannot continue to wait. They must pay for their delay.”
This decree is controversial not only because of its severity but also due to its timing. The Federal Reserve’s Atlanta branch recently lowered its GDP growth forecast for Q1 2025 from -1.5% to -2.8%, a significant drop from the previous +3.9% just weeks earlier. Imposing tariffs on America’s three key trading partners—Canada, Mexico, and China—during a fragile economic period has made this decree a focal point, raising concerns about a global crisis. From businesses to investors, everyone feels the heat from Trump’s decisive action.
Cryptocurrency in Free Fall – Bitcoin Leads the Decline
Trump’s tariff storm dealt a devastating blow to the cryptocurrency market, causing it to plummet in panic. Bitcoin, the “king” of the crypto world, led the decline, dropping from $95,000 to $86,062 within 24 hours, erasing previous gains fueled by Trump’s rumored plan to establish a national cryptocurrency reserve fund with BTC, ETH, XRP, SOL, and ADA. Not just Bitcoin suffered; the entire crypto ecosystem was swept into the vortex. Ethereum (ETH) fell by 15%, from $2,550 to $2,130, while altcoins like XRP, SOL, and ADA also plummeted with average declines exceeding 15%.
The collapse spread across the crypto market. The total market capitalization evaporated by 11%, from its peak to just $2.9 trillion—the lowest since November 2021. Bitcoin’s dominance surged to 58%, indicating investors hastily sought refuge in the largest cryptocurrency amidst the chaos. Data from CoinGlass recorded $810 million in derivative liquidations within 24 hours, mostly from long positions, pushing the Fear and Greed Index to 15—extreme fear levels not seen since Bitcoin broke below $80,000 at the end of February 2025.
From individual investors to large funds, no one could react in time to this free fall. Hopes for a “spring” for cryptocurrencies, thanks to Trump’s previously friendly gestures, evaporated when the tariff decree turned all predictions upside down.
Reasons Behind the Cryptocurrency Plunge
The cryptocurrency free fall is not just an immediate reaction to the tariff decree but also stems from deeper causes. First, Trump’s tariffs threaten to disrupt the global economy. Canada, Mexico, and China are pillars in the U.S. supply chain, from wood and energy (Canada), cars and components (Mexico), to consumer goods (China). Imposing a 25% tariff on the two neighboring countries and increasing taxes on China has investors worried about supply chain disruptions, rising prices, and inflation. U.S. stocks immediately plummeted—Dow Jones lost 800 points, Nasdaq fell by 3%—triggering a wave of selling off risky assets like cryptocurrencies.
Second, the tariff decree shattered market optimism. Just a day earlier, confidence was high due to two major announcements: TSMC’s commitment to invest $100 billion in building five chip factories in Arizona, creating thousands of jobs, and Trump’s plan to establish a cryptocurrency reserve fund. These factors pushed Bitcoin to a peak of $95,000, with hopes for a new era for cryptocurrencies. But the tariff decree was a surprise blow, extinguishing all optimism and causing investors to turn away from crypto to protect their capital against the bleak economic outlook.
Third, the unstable U.S. economy was the “straw that broke the camel’s back.” The GDP growth forecast for Q1 2025 was sharply reduced from -1.5% to -2.8% by the FED Atlanta, raising fears of a global recession. In this situation, cryptocurrencies—known for their volatility—became the first target for capital withdrawal, sending Bitcoin and altcoins into an uncontrollable free fall. The combination of tariffs, shattered expectations, and economic instability created a “perfect storm” that sank the crypto market.
International Reaction and Market Pressure
Trump’s tariff shockwave not only shook the U.S. but also caused global turmoil. Canada immediately spoke out against it, with Prime Minister Justin Trudeau calling it an “unfair blow,” warning of significant losses to North American trade if tensions persist. Mexico expressed concerns as its automotive and electronics sectors—backbones of its economy—face the risk of being strangled by the 25% tariff. China, with a total tariff of 20%, is expected to retaliate strongly, reigniting the U.S.-China trade war that never truly cooled.
These reactions create immense pressure on financial markets. If Canada reduces wood and energy exports, Mexico limits car and electronics supplies, and China cuts raw materials, global commodity prices will soar, pushing U.S. inflation higher. This could force the FED to consider raising interest rates, adding more pressure on already fragile stock and cryptocurrency markets. In the short term, Bitcoin risks breaking below $80,000—the lowest since November 2024—if panic does not subside. Altcoins, with lower liquidity, face even greater risks of deeper and prolonged declines, extending the “crypto winter.”
However, there is a glimmer of hope in the long term. If Trump’s tariffs achieve their goal of controlling drugs and smuggling, the U.S. economy might stabilize, creating conditions for cryptocurrencies to recover. But if tensions escalate into a full-scale trade war, market pressure will increase, making it difficult for Bitcoin and other cryptocurrencies to withstand the storm from this decree.
Trump’s March 2025 tariffs have sent cryptocurrencies into a free fall, with Bitcoin leading the decline from $95,000 to $86,062 amidst economic instability. International reactions and market pressures exacerbate the shock, turning this decree into an unexpected storm. The Blockchain Bulletin Weekly suggests this is a wake-up call that cryptocurrencies cannot remain outside major fluctuations; their future depends on how the world navigates these tensions.