As of February 3, 2025, Bitcoin has declined by 5%, trading at $99,000, following President Donald Trump's announcement of new tariffs: a 25% tariff on Canadian and Mexican goods and a 10% tariff on Chinese imports. This drop in Bitcoin price has contributed to a significant loss of $300 billion from the cryptocurrency market [e423f060].
The U.S. stock market also reacted negatively to these tariffs, with the S&P 500 down 0.8%, the Dow Jones Industrial Average down 122 points (0.3%), and the Nasdaq composite dropping 1.2% by 11:45 AM ET. Initial losses were severe, with the S&P 500 down nearly 2% and the Dow dropping 665 points due to fears of a trade war. However, losses were mitigated after Mexican President Claudia Sheinbaum announced a one-month reprieve on tariffs [c0caa6cc][fa5c5742]. Notably, major companies such as Tesla and Apple were among the hardest hit, with Tesla's stock down 5% and Apple's down 4%. Other notable declines included Constellation Brands (-3.5%), Best Buy (-2.4%), and Nvidia (-3.4%) [fa5c5742][c0caa6cc].
The cryptocurrency market is feeling the effects of these tariffs, with smaller cryptocurrencies such as Ether and Ripple experiencing significant losses of 10.7% and 8.8%, respectively. This trend is reflective of broader market concerns, as the ASX 200 index also fell by 1.79%, closing at 8,379.4 points [2e0e3a80].
Earlier in January, Bitcoin had seen a brief surge above $95,000, but it has since faced increasing volatility. Analysts had previously noted that the failure to maintain levels above $100,000 led to bearish sentiment, with critical support identified at $92,493 [16b39d38]. The ongoing economic context, particularly the robust U.S. non-farm payrolls report, had initially decreased expectations for Federal Reserve interest rate cuts, contributing to Bitcoin's price fluctuations [3e0ef396].
Goldman Sachs has estimated that these tariffs could result in a 2-3% hit to corporate earnings, raising concerns about potential inflation and long-term impacts on U.S. equities, as highlighted by analysts from Morgan Stanley and JPMorgan Chase [e423f060]. Concerns about rising prices for groceries and electronics could further increase U.S. inflation, affecting Federal Reserve interest rate cuts [c0caa6cc]. Despite these challenges, Bitcoin spot ETFs had seen a net inflow of $312.8 million, indicating some institutional demand amidst the turbulence [16b39d38].
As the market continues to navigate these developments, analysts are closely monitoring Bitcoin's performance, particularly as it approaches critical support levels. A potential correction to $85,000 could attract long-term investors, but significant selling pressure remains a concern as the cryptocurrency market grapples with these volatile conditions [3e02f9a6][6f2d736c].