The markets for cryptocurrencies have been erratic during the last few weeks. The problem was made worse by President Donald Trump’s “reciprocal tariffs” last week.
Since the announcement, Bitcoin, the biggest cryptocurrency by market capitalization, has plummeted by up to 16%, trading below $75,000 for the fifth consecutive month. The situation has become worse for Ethereum, the second-largest cryptocurrency, which has dropped as much as 28% to about $1,400, which is at levels not seen since March 2023.
Many people are drawing comparisons between the current state of affairs and the notorious COVID-19 crash amid the market meltdown, but what’s the difference?
In the midst of tariff panic, Bitcoin plummeted about 8% from over $81,000 to roughly $74,500 early Monday, prompting many to think of the COVID-19 crash in March 2020.
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“Black Swan in crypto today. With a nearly 1:1 match, this situation is comparable to the Covid dump, according to prominent market analyst Jonathan Carter on X.
On the other side, fellow notable analyst “Tyler Durden” stated, “Still not even 10% of the feeling of March covid crash.”
These feelings call for a new examination of the events surrounding the COVID-19 coin meltdown.
The globe was rocked by the COVID-19 epidemic, which upended almost every sphere of civilization. Global financial markets, including the cryptocurrency market, were affected by these disruptions.
When then-President Trump proclaimed the epidemic a national emergency on March 13, 2020, the overall cryptocurrency market value dropped by nearly 40% from around $224 billion to $135 billion, its greatest intraday collapse on record.
Additionally, Bitcoin saw its biggest intraday drop ever, falling more than 35% from almost $7,000 to less than $4,500. Ethereum saw an even greater downturn, dropping 43% on the day, as is usually the case, although it was just the second-worst correction in the company’s history.
In contrast, the bitcoin market value only increased by 3.5% from roughly $2.8 trillion to $2.6 trillion on the day of Trump’s “Liberation Day” tariffs.
Additionally, the first price drop of Bitcoin from $88,500 to about $82,000 was barely 3%. Additionally, the asset has only decreased by around 32% from its annual peak of $109,600 to $74,500 in the protracted collapse.
While Ethereum has fallen as much as 62% from its annual peak, it fell 6% on the original news.
According to the statistics, the response of the cryptocurrency market to Trump’s tariffs has not been quite as severe as the COVID-19 pandemic. This can mean that the market is more mature or that there is more potential for a decline.
The fact that Trump does not seem to be considering a moratorium on the contentious new tariffs, as some had anticipated, does not help the issue. Rather, he has stepped up his threats of further penalties on China.
Meanwhile, expectations of an imminent intervention have been dashed by the Federal Reserve. Fed Chair Jerome Powell said the central bank was taking a wait-and-see stance in interviews with reporters on Friday.
