The crypto market took a heavy hit on Tuesday as prices of top tokens like Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) crashed in sync with a broad sell-off across U.S. stock indices. The downturn came shortly after former President Donald Trump’s “Liberation Day” speech, where he unveiled aggressive new tariffs on foreign imports.
Major Cryptos Break Key Support Levels
Bitcoin dropped 3.5%, approaching critical support near $80,000, while Ethereum fell 2.71% to $1,765. XRP also broke below the important $2 support level, losing 1.35% in the last 24 hours.
Overall, the total crypto market cap declined by 4%, now standing at $2.6 trillion. That means investors have watched more than $1 trillion in value vanish from the market in recent months.
Stock Market Meltdown Adds Fuel to the Fire
The collapse in crypto prices mirrors the bloodbath on Wall Street. Within 30 minutes of the opening bell, major indices were deep in the red:
- Nasdaq: -4.7%
- S&P 500: -3.78%
- Dow Jones: -3.4%
The sharp declines followed Trump’s announcement of sweeping new tariffs, including:
- A minimum 10% tariff across the board
- 34% on Chinese imports
- 24% on goods from the European Union
- 25% tariffs on steel, aluminum, and industrial parts
These measures were tougher than markets had anticipated and are now raising serious concerns about a potential recession.
On Polymarket, the odds of a U.S. recession in 2025 surged to a record high. An analyst at TS Lombard summed it up bluntly:
“This isn’t just a mild stagflationary event—it’s a recession-producing turn, especially if the tariffs remain in place.”
The Federal Reserve’s Next Move Could Shape Crypto’s Future
Historically, cryptocurrencies and equities tend to crash during black swan events, only to rebound once central banks step in.
- In 2008, the Global Financial Crisis sent markets spiraling—but a decade-long stock rally followed after the Federal Reserve’s intervention.
- Similarly, in March 2020, both stocks and crypto plunged when COVID-19 was declared a global pandemic—but bounced back sharply after the Fed slashed interest rates.
This time, the Fed may be forced to accelerate rate cuts if a full-blown recession starts to take shape. There’s also speculation that Trump could approve targeted bailouts (like those for farmers), which would inject more liquidity into the economy and possibly lift asset prices—including crypto.
