The cryptocurrency market experienced a dramatic turnaround on Tuesday as major tokens such as Cardano’s ADA, XRP, and Solana’s SOL plummeted by 21%. This decline came just days after an exhilarating surge triggered by President Donald Trump’s announcement of a U.S. crypto strategic reserve, which effectively erased all the gains that had been generated by the initial excitement.
The sharp reversal in prices corresponds with a cautious sentiment among traders following Monday’s market rally that was influenced by Trump’s ambitious plans. A detailed CoinDesk analysis had previously highlighted the market’s overarching hesitance, despite the surge.
On Sunday, Trump’s declaration that the U.S. reserve would include ADA, XRP, and SOL, alongside prominent cryptocurrencies like bitcoin (BTC) and ether (ETH), sent the market into a frenzy. Within hours, ADA’s value soared over 60%, XRP rose by 33%, and SOL increased by 22% as traders expressed optimism regarding a government-backed stockpile of digital assets.
This development was widely regarded as a potential game-changer for the crypto industry, with analysts suggesting it could lend legitimacy to digital assets and foster greater institutional adoption.
Nevertheless, this bullish rally proved to be short-lived, as profit-taking set in amidst a broader risk-off atmosphere in the equity markets. Kevin Guo, director of HashKey Research, remarked in a Telegram message, “Trump’s latest tariff announcements on Canada, Mexico, and China resulted in a massive selloff of crypto assets, completely reversing the gains from the previous day’s crypto strategic reserve news.”
Guo further emphasized the fragile nature of cryptocurrencies as risk assets that are inherently tied to the performance of the U.S. equity market. On Tuesday, news broke that China would implement a 15% tariff on several imports, while Trump announced a doubling of tariffs on Chinese imports to 20%. He also confirmed that 25% tariffs on goods from Mexico and Canada would take effect immediately.
The ramifications were swift: Bitcoin saw a 9% decline over the past 24 hours, trading around $84,000 during Asian afternoon hours. Meanwhile, Ether was not far behind, experiencing a 12% drop to just above $2,000, marking its lowest point since early 2023.
As the White House Crypto Summit approaches on Friday, investors are bracing themselves for potential clarity or further turbulence, depending on the outcomes of the discussions.
