Key takeout
- The Crypto market lost around $500 billion in response to Trump's tariff announcement.
- XRP, ADA and SOL recorded double-digit losses after recent rally.
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About $500 billion was wiped out of the crypto market the past 24 hours before Trump's tariff deadline.
XRP, Cardano (ADA) and Solana (SoL) — three major crypto assets that recorded significant profits in Trump's proposed crypto sanctuary — have now suffered sharp losses and have recorded double-digit declines as market sentiment changes.
XRP has dropped 17% in the last 24 hours, erasing profits that have been gained following Trump's previous statement on the inclusion of crypto assets in the US reserve, according to Coingecko data. Assets have previously surged over 25% to nearly $3.
ADA and SOL experienced similar declines, with a decrease of approximately 25% and 20%, respectively. The ADA, which had risen more than 75% on Sunday to exceed $1, fell below $0.8. Sol has dropped from $177 to $135.
Crypto's total market capitalization has shrunk by more than 12% in the last 24 hours. Bitcoin was pulled back after surged above $94,000 on Sunday. Digital assets are currently trading at around $83,700, down almost 10%.
Ethereum, the second largest crypto asset, has dropped by around 15%, but even more low cap coins are down even further.
Tariffs in Canada and Mexico to take effect tomorrow
The fear of a trade war quickly wiped out the hype that had accumulated around US crypto sanctuaries.
The market recession escalated after Trump confirmed that 25% tariffs in Canada and Mexico would come into effect Tuesday.
“They need to have tariffs, so all they have to do is, frankly, build their car plants and build other things in the US.
Regarding China, the White House has also announced 20% tariffs on Chinese imports. Initially, a 10% tariff was imposed, and as of March 4, 2025, an additional 10% tariff was added.
This is a sharp escalation in the US-China trade war, with tariffs rising much faster than Trump's first term.
These tariffs could raise trade costs between the US, Canada and Mexico and undermine business and economic growth.
Economic growth forecasts have become significantly
The US economy could be contracting at the fastest pace since the Covid-19 lockdown, according to Atlanta's GDPNOW Federal Government Banking model, which forecasts a 2.8% decline in gross domestic product in the first quarter of 2025.
Just a month ago, the same model estimated that the economy was steadily progressing with a growth rate of nearly 4%. While forecasts for GDP may be volatile, other economic indicators (such as record trade deficits, lower consumer confidence, slower spending) have reinforced concerns about deepening slowing.
If realized, this contraction could mark the beginning of what some analysts call “Trump Kestion,” and draw comparisons with the sharp economic decline of 2020.
How did these affect cryptography?
According to Kobeissi's letter, the growing economic uncertainty and the fear of a trade war are already heavily in financial markets.
The real driver here is the global move towards risk-off trade.
As trade war tensions rise and economic policy uncertainty spreads, all dangerous assets are declining.
This was seen in stocks, crypto and oil prices.
A safe haven is thriving. pic.twitter.com/qffcdwngy
– Cobessie's Letter (@kobessiletter) March 4, 2025
Financial markets have experienced sudden divestment in the past few hours, and the recession has been greatly driven by the weakness in the US stock market, triggered by a recent announcement from President Trump.
The stock market slump has leaked to crypto as investors sold high-risk assets in response to economic uncertainty. Increased tariffs can slow economic growth and reduce investors' desire for speculative assets such as Bitcoin and altcoin.
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