Why Is Crypto Down Today? Trump’s Tariffs Threaten Market Recovery
The cryptocurrency market experienced a significant dip following President Donald Trump’s announcement of a 25% tariff on imported vehicles and auto parts. While the market showed some signs of recovery during the American trading session, leading cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) were initially hit hard by the news.
Trump’s Tariffs and Market Reaction
Trump’s decision to impose a 25% levy on auto imports aligns with his agenda to boost domestic manufacturing. Effective from April 2, the tariffs are expected to generate over $100 billion in short-term revenue. However, market analysts are concerned that this move could drive inflation higher, putting pressure on the Federal Reserve to reconsider its current monetary easing plans.
The potential for increased inflation often triggers volatility across financial markets, including the crypto sector. As the news broke, BTC quickly tested the $85,000 support level before rebounding, while ETH found temporary support at around $1,985.
Bitcoin’s Critical Support Level
Bitcoin is now hovering near a significant support zone at $85,800. Analysts suggest that if this level breaks, BTC could face further losses of up to 2.5%. On the other hand, if Bitcoin manages to hold its ground, a potential double-bottom pattern could emerge, signaling a bullish reversal.
Technical indicators currently favor a bearish outlook. The Relative Strength Index (RSI) is nearing oversold levels, and the Moving Average Convergence Divergence (MACD) histogram is trending negatively, suggesting that downward momentum could persist.
Ethereum’s Struggle at Key Support
Similar to Bitcoin, Ethereum is also facing challenges. The asset has established support at $1,985. However, if selling pressure increases and ETH falls below this level, losses could accelerate by as much as 3%.
ETH’s technical indicators remain weak, with the RSI dropping below the signal line and the MACD showing bearish momentum. Traders are cautious, anticipating further downside unless ETH manages to hold the support level and regain positive momentum.
Broader Market Impact
While BTC and ETH remain relatively stable on a weekly basis, some other cryptocurrencies have faced notable losses. XRP is down by 7.3% over the past week, reflecting broader uncertainty in the market. On the other hand, Solana (SOL) has shown resilience, gaining 4.4% over the same period.
Interestingly, meme coins like Dogecoin (DOGE) have outperformed, with DOGE recording a 10.2% gain in the past seven days. This suggests that speculative traders are still active, despite the macroeconomic headwinds.
What’s Next for Crypto?
Investors are closely watching how the market responds to the ongoing tariff developments. If inflation fears intensify, the Federal Reserve may delay or reduce the expected interest rate cuts, further impacting crypto prices. However, any signs of economic resilience or a shift in the Fed’s stance could offer temporary relief.
For now, the support levels at $85,800 for BTC and $1,985 for ETH remain critical. A decisive move in either direction could set the tone for the market in the coming days. Traders are advised to stay cautious and monitor macroeconomic updates closely.
