Crypto prices sink on Trump reserve scepticism, tariff concerns
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All of the cryptocurrencies that Mr Donald Trump said would be included in his strategic reserve plan posted sharp declines on March 3.
PHOTO: AFP
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NEW YORK - Euphoria in the digital asset markets stemming from US President Donald Trump’s plans for a strategic crypto reserve turned to scepticism on March 3, triggering early losses in cryptocurrencies that worsened throughout the day as investors braced themselves for the US to impose 25 per cent tariffs on Mexico and Canada.
Mr Trump said on March 2 on Truth Social that the XRP, SOL and ADA tokens will be included in the reserve, along with Bitcoin and Ether.
The news ignited an immediate crypto rally, offering relief to an asset class fresh off its worst month since 2022.
Yet, the inclusion of the three lesser-known digital tokens was later met with questions from investors about the project’s merits.
All of the cryptocurrencies that Mr Trump said would be included in the reserve posted sharp declines by late afternoon in New York amid a broad retreat in risk assets that dragged the tech-stock-heavy Nasdaq 100 Index down more than 2 per cent.
Most of March 2’s gains in the tokens were wiped out.
The Bloomberg Galaxy Crypto Index slumped almost 28 per cent in February.
The rout put pressure on Mr Trump, who returned to the White House after the industry showered him with campaign donations and praise.
Even the Securities and Exchange Commission’s reversal of a years-long crackdown had failed to stem the sell-off, which many attributed in part to nervousness about Mr Trump’s trade tariffs and dramatic moves to gut government programmes.
“For a president who thrives on being the market’s hero, last week’s risk asset performance was anything but inspiring,” QCP Capital said in a note on March 3. “The political calculus was clear – Trump needed a win before his approval ratings start slipping, a metric he likely takes very personally.”
Bitcoin was almost 9 per cent lower as at 3.20pm in New York, trading near US$86,000, while Ether lost about 16 per cent. XRP sank 18 per cent after rallying 32 per cent on March 2, while SOL and ADA slipped about 19 per cent each.
Crypto prices fell to their lows of the day after Mr Trump said in the White House that there was “no room left for Mexico or for Canada” to negotiate with the US to win a reprieve from 25 per cent tariffs scheduled to take effect on March 4.
In its first statement about creating a crypto reserve in January, the White House said such a stockpile would be “potentially derived from cryptocurrencies lawfully seized by the Federal Government through its law enforcement efforts”.
Bitcoin tends to be the main crypto token seized by law enforcement agencies, including in the bust of the notorious Silk Road website.
The initial announcement contained little detail on how the reserve would be created, disappointing investors and helping set the stage for February’s sell-off.
Trump’s posts on March 2 came just as his crypto czar David Sacks prepares to host the White House’s first industry summit on March 7.
On March 3, Mr Sacks took to the X platform to announce that he sold all his cryptocurrency holdings – including Bitcoin, Ether and SOL – before Mr Trump’s administration took over in January. BLOOMBERG
