The progress of the cryptocurrency market is baffling; it flips with the stock prices of coins and tokens on offer busting or crashing like a rollercoaster dependent on global political circumstances and regulations.
A lot has recently happened that has caused immense volatility in the crypto market:
- The two tariffs proposed by President Trump and the first-ever White House crypto summit have opened new doors for the space.
- The shifting of the blueprint by The SEC is incredibly newsworthy as it will shift the approach to regulating crypto in the US, and, is as equally important for investors as it is for developers and the existing market.
Take a step back as we explore how these changes are reshaping the structure of the crypto market.
A bolt from the blue Trump’s Tariffs: Disruption to Crypto Markets
On March 1, 2025, President Trump, while outlining his plan to become re-elected, outlined a new set of tariffs against Mexico, Canada, and China. Come March 4th, the border gets a fresh new set of fees to be applied 25% for goods from Mexico and Canada, and an extra 10% for China. The primary aim is to address concerns over illegal immigration and the influx of illicit drugs into the United States.
The cryptocurrency sector was hit hardest during the initial aftermath of the announcement due to its volatility. Other financial fields also faced shocks on some level, trying to make sense of markets and how to be prepared to react.
Market Responses:
- Bitcoin Falls: Usually, market leaders set the trend for other industries. In this case, the industry leader, Bitcoin (BTC) fell to nearly $80,000 dollars, which is down around 25% since the $109,000 dollar peak in January 2023.
- Ethereum’s Drop: The next major cryptocurrency by market cap, Ethereum (ETH), struggled as well, dropping nearly 6% and hitting its lowest value since January 2024. This puts the overall economic trend in worse condition since other larger players in the market are constantly being hit with bad news.
- XRP’s Fall: XRP had seen some gains after the presidential Trump’s election victory, but later erased all gains with a staggering 30%+ drop in February.
Impact Analysis:
The concern of a trade war comes sharper with the implementation of these tariffs. This has made investors move away from volatile assets like cryptocurrencies and fuels fears of them facing much harsher consequences from retaliatory actions from trade partners. The market seems to be pessimistic towards other nations’ trade relations as well. More dread revolves around inflation and the impact it has on growth in the economy and how these factors shape economic growth have driven more and more changes in investor behavior.
Why the first-ever White House Crypto Summit could be a game changer?
With everything that happened in recent times, hearing about a ‘first-ever’ White House Crypto Summit brings a bit of hope to the crypto community. The summit is set for March 7th, 2025 and targets the establishment of an innovative regulatory policy for the crypto industry. The crypto venture capitalist and czar of the White House, David Sacks, will preside over the meeting, which will bring together prominent founders, CEOs, and investors alongside members from the President’s Working Group on Digital Assets.
Where Things Could Turn Positive:
- Increased Investment Return: A well-defined regulatory framework can enhance clarity that is extremely vital for crypto experts, which in turn can foster a positive culture for investment and adoption on an institutional level.
- Greater Expenditure from the Government: Administering directly with the industry suggests spending efforts on leadership further proves the government’s support towards advancement in the digital asset industry.
- Less Uncertainty in the Market: Improved regulation and the presence of dialogue can eliminate bad expectations and uncertainty, which will lead to good change in the market.
The SEC’s Legal Pullback: A Shift of Focus
On March 1, 2025, U.S. District Judge Carol Bagley Amon nullified the SEC’s case against Richard Heart, the founder of Hex, a cryptocurrency. Initially, the SEC charged the defendant with raising over a billion dollars with unregistered offers for crypto and stealing $12.1 million of it to buy a luxuriously large black diamond. The court, however, was not convinced that Heart was connected to the United States as his online ads were not exclusive to the American audience.
This case marks the SEC’s change of strategy regarding cryptocurrency, showing an even more drastic shift from their hot pursuit style of enforcing regulation to a cold and calculated one.
Effects on Stakeholders:
- Investors: Easing up on scrutiny may be a double-edged sword as it allows a greater investing scope, but also increases chances of falling into scams because there is less authoritative protection.
- Developers: New laws will certainly lessen the burden for developers, but they will face great challenges in trying to keep abreast with shifting political winds.
- Market Dynamics: Even though new rules will bring increased order over an unsettled market, they will take time to be implemented and as a result, the market will have to face short-term disturbances.
The technologically advanced drive for change will tip the balance in the dynamic crypto market which points out the necessity for adopting a proactive approach towards legislation.
The Balancing Act: Dealing With Two Announcements At Once
The new tariffs and the upcoming crypto summit put forth a complicated problem for investors to consider.
Investment Outlook For The Near Term:
- Market Moves: The response to the new tariff policies has been an increase in volatility. Investors can expect aggressive moves one way or the other as the market processes this information.
- Risk Evaluation: Under these circumstances, an evaluation of one’s risk appetite and investment destination is important. As always, diversification is key.
Investment Outlook For The Long Term:
- Regulatory Actions: Some long-term investment focus could be attracted by the crypto summit because its outcome may provide the necessary conditions for strong regulation.
- International Economic Relations: There will be new international relations with trade, driven by the new tariffs, that will impact the wider economy and, therefore, the crypto economy.
Comparison Table: The Price of Cryptocurrency After the Recent Developments in the World.
| Cryptocurrency | January 2025 Peak | Post-Tariff Announcement Price | Percentage Change |
|---|---|---|---|
| Bitcoin (BTC) | $109,000 | $80,000 | -26.6% |
| Ethereum (ETH) | $2,500 | $2,170 | -13.2% |
| XRP | $3.00 | $2.11 | -29.7% |
Final Thoughts
The sudden shifts in the price of cryptocurrencies recently is a telltale sign of the influence of political decisions on the monetary systems in place. The rising tariffs imposed by President Trump have only further set the stage for more uncertainty. Nonetheless, a White House Crypto Summit might bring some optimism. Foremost, however, investors need to make sure they’re up to date, re-evaluate their risk threshold, and scope out the possibilities short-term as well as down the line, keeping this ever-evolving sector in mind.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always DYOR before making investment decisions.
Source
Article: https://beincrypto.com/learn/trump-tariffs-crypto-guide/
Article: https://www.investopedia.com/bitcoin-drops-to-usd80-000-crypto-tied-stocks-fall-11688203
Article: https://www.barrons.com/articles/bitcoin-xrp-crypto-selloff-359debe7