Bitcoin has recently faced significant turbulence following the announcement of new tariffs by U.S. President Donald Trump on imports from Canada, Mexico, and China. On February 1, Trump introduced tariffs of 25% on Canadian and Mexican goods and 10% on Chinese imports. This development triggered a rapid decline in Bitcoin prices, which dropped below $100,000 on February 2, 2025, marking the loss of nearly all gains made at the start of the year.
According to analysts at Binance, the increase in import tariffs could exacerbate inflationary pressures, potentially leading to higher interest rates. Such conditions may decrease investor appetite for riskier assets, including cryptocurrencies like Bitcoin. Notably, Bitcoin's value plummeted to below $93,000 on February 2, representing approximately 10% loss over just two days, as reported by CoinDesk.
The drop was exacerbated by strong economic data from the U.S., which raised concerns about the Federal Reserve's likely interest rate hikes. Rising yields on U.S. government bonds also contributed to declining interest in risk assets, including cryptocurrencies. At the time of this report, Bitcoin was trading at $92,889, reflecting a 6.87% decrease from the previous session.
Crypto market charts indicate the current support levels for Bitcoin lie within the range of $90,000 to $109,588, where it has spent the last several days. This range may serve as an important benchmark for future price movements. Despite the current volatility, many analysts are optimistic about Bitcoin’s long-term prospects. If Bitcoin can sustain itself above the $100,000 mark and continue on its upward path, it could positively influence altcoin prices, including Ethereum, which has shown to move alongside Bitcoin traditionally.
Ryan Lee, Chief Analyst at Bitget Research, suggested Bitcoin might retreat to around $95,000, viewing it as a significant support level. Some experts believe the present downturn might represent only a temporary setback, not necessarily indicative of a broader market correction.
According to Axel Kibar, a recognized cryptocurrency analyst, predictions of panic and decline following each minor drop of about 1% should not be viewed as definitive signs marking the end of what is termed the 'bull trend' — signals implying the market may start trending downward rather than upward.
On February 1, Trump announced the tariffs under the pretext of curbing illegal immigration and drug trafficking, particularly emphasizing fentanyl smuggling from these neighboring nations. Following these moves, Canada has reportedly prepared to impose retaliatory tariffs on $105 billion worth of American goods. Canadian Foreign Minister Mélanie Joly has warned of potential responses.
Mexico's President Claudia Sheinbaum firmly rejected U.S. allegations linking her government to drug cartels, highlighting the need to resolve issues through dialogue instead of tariffs. She has instructed her economy minister to devise alternatives involving both tariff and non-tariff strategies to protect Mexico's interests.
The introduction of tariffs affecting Chinese goods is equally concerning, as China has signaled its intention to lodge a complaint with the World Trade Organization (WTO) against the U.S. actions. This geopolitical tension could create additional uncertainty for markets, including cryptocurrencies.
Notably, the three countries involved account for roughly one-third of all U.S. imports, totaling nearly $1.5 trillion. Canada and Mexico had previously been part of the USMCA trade agreement established during Trump's first term, which was intended to replace NAFTA. This agreement aimed to create more balanced and mutually beneficial trade conditions, bolstering high-paying jobs and growth throughout North America.
With significant changes made to vehicle content requirements and improvements to digital trade conditions, this agreement reflects deep economic ties. The repercussions from the recent tariff announcements could lead to turbulent days for both traditional markets and the burgeoning cryptocurrency sector, leaving enthusiasts and investors alike waiting to see how this will play out.
For those following Bitcoin and the broader cryptocurrency market, the interactions between governmental policies, economic indicators, and asset price movements will undoubtedly prove to be areas of substantial interest as the story continues to evolve.