Bitcoin’s (BTC) dominance—an indicator of its market share within the cryptocurrency sector—surged past 60% on February 2, coinciding with a broad market downturn triggered by newly announced trade tariffs from U.S. President Donald Trump.
Alternative cryptocurrencies, or altcoins, bore the brunt of the decline, with Ethereum (ETH) slipping by approximately 9.3% over the past week, XRP tumbling 13.8%, and Solana (SOL) experiencing a significant 19.3% drop, according to data from CoinMarketCap.
The tariffs introduced by the U.S. administration include a 25% levy on imports from Canada, a similar 25% tariff on Mexican goods, and a 10% tax on Chinese imports. These measures prompted swift retaliatory tariffs from the affected nations.
With rising inflation concerns and expectations of persistently high interest rates in 2025, investors have pivoted away from volatile assets like cryptocurrencies, instead favoring U.S. government bonds and other traditional safe-haven investments.
Further Downside Possible
Market analyst Van Nuener cautioned that further downside could be on the horizon, especially with the reopening of U.S. futures markets on February 2.
“We could see futures markets open in the red, which might lead to another dip in crypto prices,” Nuener shared on social media.
Arthur Hayes, co-founder of BitMEX, previously predicted a potential cryptocurrency sell-off around Donald Trump’s presidential inauguration. In a December 2024 article, Hayes suggested that while traders initially celebrated the election of a pro-crypto president, the realization that regulatory changes would take time could dampen enthusiasm.
Ryan Lee, chief analyst at Bitget Research, has forecasted a possible pullback in Bitcoin’s price to around $95,000 in the short term. Lee emphasized the role of macroeconomic conditions—such as labor market reports and Federal Reserve policies—in shaping BTC’s trajectory in the coming weeks.
AI and Tech Uncertainty Add to Market Jitters
The recent slump in both U.S. tech stocks and cryptocurrency markets has also been influenced by the unveiling of DeepSeek R1, a cutting-edge open-source artificial intelligence model developed in China.
According to its whitepaper, DeepSeek R1 rivals leading AI models from OpenAI, despite being trained on older, less advanced hardware at a fraction of the cost. The model’s launch has been described as a black swan event, fueling concerns within the U.S. government.
In response, the Trump administration is reportedly weighing additional restrictions on Nvidia’s exports to China, a move that has added further uncertainty to global financial markets.
For more news, find me on Twitter Giannis Andreou and subscribe to My channels Youtube and Rumble
What is your opinion on this particular topic? Leave us your comment below! We are always interested in your opinion!
