Why Is the Crypto Market Down Today? Trump Tariffs Shake Investors

The crypto market took a big hit on March 4, with Bitcoin, Ethereum, XRP, and Solana all dropping sharply. Bitcoin (BTC) fell nearly 10% to $83,738, while Ethereum (ETH) dropped 15% to $2,076. XRP lost 18%, and Solana crashed by 20%. The market lost nearly $250 billion in just one day.

The crash started when traders began selling off large amounts of crypto, causing massive liquidations. In just 24 hours, more than $1 billion in crypto was wiped out, according to Coinglass . 

The Crypto market on red as of March 4th | CoinMarketCap

Bitcoin alone saw $396.16 million in liquidations, while Ethereum recorded $209.58 million. Even meme coins weren’t safe. Dogecoin (DOGE) lost 15%, Shiba Inu (SHIB) dropped 13%, and Pepe Coin (PEPE) fell 18%.

At first, things were looking good. Donald Trump announced a U.S. Crypto Strategic Reserve on Sunday, making it seem like the government would hold Bitcoin and Ethereum. This pushed crypto prices up by 4.41% on March 3. But the excitement didn’t last. Investors started doubting if the plan was real, and people quickly sold off their holdings.

Then came the real shock: Trump announced new tariffs. He raised taxes on Chinese goods from 10% to 20% and put a 25% tax on imports from Mexico and Canada. China hit back with its own 10%-15% tariffs on U.S. goods . This made investors nervous about a trade war, and they started pulling money out of risky investments like crypto.

Why did the crypto market crash today?

Based on events stated above, there are 3 key reasons:

1. Massive liquidations
2. Trump’s crypto reserves effect is short-lived.
3. Market fails to breach resistance

Avinash Shekhar, CEO of Pi42, explained, “The crypto market experienced extreme volatility following former President Donald Trump’s announcement of a U.S. Crypto Strategic Reserve. However, gains were short-lived as skepticism over implementation and regulatory approval led to sharp corrections.”

The stock market also felt the impact, with the S&P 500 losing $1.5 trillion in value. Investors are in full panic mode, as shown by the Fear and Greed Index, which dropped from 33 (Fear) to 15 (Extreme Fear) overnight. Just a month ago, the index was at 60 (Greed), showing how quickly things changed.

Now, everyone is watching two big upcoming events. On March 7, Trump will hold a White House Crypto Summit , which could bring some regulatory clarity. Also, new spot ETFs for XRP, Cardano, Dogecoin, and more might be approved soon. Until then, crypto remains unpredictable, and investors are holding their breath.