Investing.com-- Bitcoin and other major cryptocurrencies saw sharp declines on Monday, as escalating trade tensions stemming from U.S. President Donald Trump's newly imposed tariffs on China, Canada, and Mexico spurred a broader market sell-off.
Bitcoin fell 6.2% to $94,088.1 by 02:01 ET (07:01 GMT).
The cryptocurrency reached an intraday low of $91,69.80, marking its lowest level in three weeks.
Ethereum , the second-largest cryptocurrency by market capitalization, also faced a sharp decline, dropping 18% to $2,567.26, a level not seen since early November.
The downturn in the crypto market coincides with heightened investor anxiety over a potential global trade war.
President Trump's announcement of a 25% tariff on imports from Mexico and Canada, along with a 10% levy on Chinese goods, has intensified concerns about rising inflation and potential liquidity issues.
These developments have led to a risk-off sentiment across financial markets, with investors moving away from riskier assets, including cryptocurrencies.
Analysts note that the cryptocurrency market, known for its volatility, is particularly sensitive to macroeconomic factors such as trade policies and inflation expectations.
The recent tariffs are anticipated to disrupt global supply chains, potentially leading to higher production costs and consumer prices. This environment of uncertainty and potential economic slowdown has prompted investors to reassess their exposure to digital assets.
Analysts attributed the market turbulence to an impending economic downturn and advised investors to consider acquiring assets at lower prices during this period.
Earlier, anticipations of friendlier crypto regulations under Trump’s administration had boosted token prices but the tariff announcement had a greater impact on the market mood.
Most altcoins slumped much more than Bitcoin, reflecting an increased risk-off sentiment.
World no.3 crypto XRP plunged nearly 19% to $2.3579.
Solana slumped 15.5%, and Polygon tumbled 19%, while Cardano declined 22%.
Among meme tokens, Dogecoin fell 17%, while President’s meme coin $TRUMP was down 14% after reaching a record low of $16.349.