US President Donald Trump’s latest tariff move has sent shockwaves through the cryptocurrency market, sparking concerns about economic uncertainty and potential volatility. As investors become increasingly cautious, Ethereum’s ether (ETH) is emerging as a particularly vulnerable asset.
A fresh round of tariffs by U.S. president Donald Trump and the lack of short-term catalysts are causing market watchers to exercise caution, with a particular concern that Ethereum‘s ether (ETH) may be significantly impacted.
Tariffs Introduce Economic Uncertainty
Trump announced on Sunday that he will introduce 25% tariffs on all steel and aluminum imports into the US, in addition to existing duties. Reciprocal tariffs will later be applicable to all countries. This move introduces economic uncertainty by potentially escalating trade wars, which can lead to market volatility. Such events tend to impact bitcoin and the broader crypto market as investors tend to move away from risk assets to safer investments.
Ether’s Vulnerability
Some traders believe that ether could be further impacted as sentiment for crypto fades down, adding to an already tumultuous year for the asset. The widely-watched bitcoin-ether ratio has dropped to 2021 levels, indicating a fallout for ETH and preference for BTC. A drop in ETH may also spell bad news for related beta bets such as memecoin dogecoin (DOGE) and Ethereum-based DeFi tokens, which tend to mirror the movements of the parent asset.
Ethereum's impact on the blockchain landscape is multifaceted.
Its decentralized platform enables the creation of smart contracts, which facilitate secure, transparent, and automated transactions.
According to a report by Deloitte, 77% of enterprises are exploring blockchain adoption, with Ethereum being a leading choice due to its high scalability and flexibility.
The network's gas fee mechanism has also improved transaction efficiency, making it more accessible for mainstream users.
Expert Insights
Augustine Fan, head of insights at SignalPlus, noted that ‘the rise of BTC vs everything else is the most evident in comparison with ETH, which is seeing record short-interest and FUD with the 2nd largest token being down -23% YTD vs a +2.5% gain in BTC.‘ He added that ‘a lack of L1 catalysts and narrative leadership will likely continue to weigh on Ethereum in the foreseeable future.‘
Nick Ruck, director at LVRG Research, shared that ‘Ethereum has been hit particularly hard as ETH reversed its entire pump from late November last year, unwinding any gains to holders.‘ He also noted that due to expectations of increased inflation, investors are betting on only one interest rate cut by the Federal Reserve this year, casting a grim outlook for risk assets including crypto.
Crypto Markets’ Volatility
Traders at Singapore-based QCP Capital expect crypto markets to flip-flop in the coming weeks as Trump’s words continue to impact markets. They stated that ‘a feedback loop is emerging—President Trump, highly sensitive to market reactions, is facing a market increasingly calling his bluff. This could embolden him further, adding another layer of volatility.‘ They also noted that ‘BTC volatility now skews in favor of puts until April, reflecting a lack of upside catalysts.‘
The crypto market is known for its high volatility, with price fluctuations occurring rapidly and unpredictably.
This is due to a combination of factors, including limited regulation, global economic trends, and investor sentiment.
According to a study by the University of Oxford, 80% of cryptocurrencies experience significant price drops within their first year of existence.
The crypto market's volatility has led to both opportunities for investors and risks, making it essential to approach with caution and thorough research.
