Bitcoin price drops below $85,000 amid trade war, US crypto reserve uncertainty

Bitcoin price tumbled nearly 10 per cent on Monday (March 3) as concerns over an escalating trade war and uncertainty surrounding a potential US cryptocurrency reserve sent investors fleeing from risk.

The world’s largest cryptocurrency fell 9.47 per cent to $85,321.69 late in the day, with more than a trillion dollars in total market valuation at stake.

The price fell further to $83,165.06 apiece as of Tuesday (March 4) morning, IST.

Ether, the second-largest cryptocurrency, dropped more than 15 per cent, while XRP, Cardano, and Solana fell nearly 20 per cent.

Why did crypto prices fall?

The cryptocurrency
price dip happened following a market-wide sell-off of these digital assets.

The sell-off followed an initial surge in digital asset prices after former President Donald Trump floated the idea of creating a national strategic cryptocurrency reserve.

The plan would involve the government stockpiling digital assets, primarily from seized holdings linked to court cases or sanctioned individuals and companies.

But scepticism quickly set in, with investors questioning whether such a fund would gain congressional approval. “everyone started buying, then wondered if it was really going to happen,” said Adam Button, managing director at Forexlive.

While
Trump named bitcoin, ether, XRP, Cardano, and Solana as potential reserve assets, the plan remains far from reality.

“It’s one thing to tweet about it, but you need to pass legislation to make this happen,” Button said.

“And that’s still a long shot.”

Further pressuring cryptocurrency markets was
Trump’s confirmation of 25 per cent tariffs on all imports from Mexico and Canada, both of which have vowed to retaliate.

Analysts say the trade war, coupled with concerns over slowing US economic growth, contributed to broader risk aversion.

Some industry leaders have also expressed doubts about the proposed reserve’s structure. Coinbase CEO Brian Armstrong suggested that limiting the fund’s holdings to bitcoin “would probably be the best option,” calling it “the simplest” and likening it to gold.

With inputs from AFP