Donald Trump's re-election sent the value of bitcoin soaring
Bitcoin’s price surged following the election, reaching an all-time high of AU$175,211.87 on Jan. 20, 2017, the day U.S. President Donald Trump took office. AFP

The cryptocurrency market experienced a sharp decline with Bitcoin hitting a three-week low and Ether falling to its lowest value since September, as fears of a looming global trade war drove investors away from riskier assets.

The market downturn appears to be due to the escalating trade war, with U.S. President Donald Trump's announcement of heavy tariffs on Mexican, Canadian, and Chinese imports over the weekend.

On Monday morning in Asia, the world's largest crypto, Bitcoin fell to AU$154,073.77, reaching a low of AU$149,837.58. Meanwhile, Ether saw a 24% drop, bringing its value down to AU$4,091.23, News.com reported.

Sydel Sierra, a digital wealth analyst, cautioned Australian investors against panic selling during the downturn.

"Zoom out - literally - is my advice," the Digital Wealth Group founder said. "When you zoom in on the charts over a 24 hour period, it's quite daunting .. but if you zoom out, it's a lot easier to see the macro cycles at work; as the saying goes: trust the process," Sierra advised, urging investors to take a step back before making any hasty decisions.

While this drop has not been deemed a "crypto doomsday," it serves as a wake-up call for many in the crypto community.

Though the downturn raised concerns among investors, some saw it as an opportunity to buy crypto assets at lower prices.

Finance commentator Robert Kiyosaki indicated that the downturn would coincide with massive job losses, offering what he sees as an opportunity to "get rich."

"BRUTAL CRASH HERE NOW. The stock, bond, real estate, gold, silver, and Bitcoin markets are crashing," Kiyosaki posted on X.

Market sensitivity to global events

Cryptocurrencies have shown increasing sensitivity to broader market sentiment in recent months.

According to Caroline Bowler, CEO of Australia-based crypto exchange BTC Markets, the impact of Trump's tariffs was being felt across the crypto space.

"The impacts of Trump's tariffs are equally being felt in crypto markets, with over $2 billion wiped out in liquidations in the past 24 hours," Bowler said. "Biggest moves have been from alt-coins such as Cardano (-25%), XRP (-22%) and even Ethereum (-18%) posting big reductions as we enter February."

Bowler added that this market movement isn't new, but it does highlight the way in which U.S. economic policies, especially under Trump, are influencing the crypto market.

Cryptocurrency under pressure

While trade tensions are a major factor in the current downturn, the lack of substantial regulatory changes under Trump's administration is also contributing to investor disappointment.

After Trump's election, many crypto investors had high hopes for a more crypto-friendly regulatory environment. Bitcoin's price surged following the election, reaching an all-time high of AU$175,211.87 (US$107,071.86) on Jan. 20, 2017, the day Trump took office. However, since then, progress on crypto-friendly policies has been slower than expected.

Despite Trump's early skepticism about cryptocurrencies, he later embraced them, even declaring that he wanted the U.S. to become the "crypto capital of the planet," Reuters reported.

Last month, he initiated the formation of a working group to recommend new regulations for digital assets and explore the possibility of creating a national cryptocurrency reserve.

ASX loses $50 billion in market value

The U.S. imposing heavy tariffs also impacted the Australian stock market on Monday, following a steep sell-off across markets in the region.

The ASX 200 and All Ordinaries index both ended the day 1.8% lower, wiping out about $50 billion in market value. It was the biggest drop for the Australian indices since September last year, with losses at one point reaching as high as 2%.

The Australian dollar also fell, dropping below 61 U.S. cents to hit a five-year low, as the U.S. dollar strengthened against other currencies.

The market's losses were widespread, with all sectors finishing in the red. Out of the 200 stocks on the benchmark index, 176 saw declines.