The US Capitol will be seen on February 6, 2024 in Washington, DC, the United States.
Mainstream crypto assets fell sharply on Friday, with Bitcoin’s value rising 6.69%, and popular digital currency DogeCoin also saw a massive decline of 9.74%. The reason for this can be attributed to several factors.
First, US President Donald Trump’s intense tariff threat has led to a major setback in global risk assets, including cryptocurrencies. On Thursday, Trump said on his social media platform that the proposed tariffs for Mexico and Canada will take effect on March 4th.
The escalation of tariff threats from the Trump administration attenuated the global appetite for risk. Both the US and Asian stock markets saw big pullbacks, and cryptocurrencies were not immune to these effects as risky assets.
Second, cryptocurrency fluctuations are closely related to global liquidity, with expectations for a 2025 Federal Reserve cut are shrinking under increasing inflation rates. On January 30th, the Federal Reserve interest rate meeting was suspended, maintaining the target federal funding rate at 4.25-4.5%. On February 27, Federal Reserve Bank President Hawkish of Cleveland suggested that current interest rate levels had not yet reached a significantly limited point and remained stable for a while.
Additionally, many members of Trump’s cabinet supported the idea that cryptocurrency would become a reserve currency, but Federal Reserve Chairman Jerome Powell dismissed this possibility during his tenure. Additionally, numerous hacking incidents, including crypto assets, show that the industry still has technology and risk management vulnerabilities.
Furthermore, major US tech stocks have been revalued in the face of low-cost, more efficient artificial intelligence. Cryptocurrencies, closely linked to US tech companies, are indirectly accelerating their revaluation due to the rise in Chinese AI companies such as Deepseek.
Overall, during the second President Trump, his policies are characterized by significant randomness and uncertainty, despite the majority of cabinet members supporting crypto assets. During this period, global macroeconomic conditions, liquidity environments, and foreign policy will affect cryptocurrency investors’ capital, behaviors, and feelings of cryptocurrency investors, resulting in major or even destructive changes that will lead to an increase in cryptocurrency.
21st Century Business Herald
