The altcoins market experienced a sharp downturn on Friday, after bitcoin hit new all-time highs earlier in the week, and following US President Donald Trump’s renewed threats to impose sweeping tariffs on the European Union and tech giant Apple.
The sudden shift from diplomatic negotiations to aggressive trade rhetoric caught investors off guard, triggering a broad-based selloff across cryptocurrencies as risk appetite evaporated.
Trade War Scenario
Trump’s announcement on Truth Social outlined plans for 50% tariffs on EU goods imported to the US, with implementation potentially beginning within nine days.
In a separate post, the president suggested Apple should face 25% tariffs on iPhones not manufactured domestically, though no specific timeline was provided for these levies. The threats marked a dramatic departure from the de-escalatory approach his administration had maintained in recent trade negotiations.
The market reaction was swift and decisive, with altcoins bearing the heaviest losses. Ethereum plummeted 4.1% to around $2,550, while XRP and Dogecoin declined approximately 3.6% to $2.35 and $0.23 respectively. Solana showed relative resilience with a modest 0.8% drop to $177, though even this moderate decline reflected the broader market uncertainty.
Meme coins experienced particularly severe declines, with Official Trump ($TRUMP) suffering a 13% drop to $13.47. The irony was palpable, as the selloff occurred just one day after Trump hosted a private dinner for top $TRUMP token holders, underscoring the volatile nature of politically-themed altcoins.
Bitcoin, while not immune to the broader market weakness, demonstrated its relative safe-haven characteristics. The flagship cryptocurrency declined 2.7% to $108,500, retreating from its all-time high of $111,800 reached the previous day.
Market Dynamics Shift
The tariff threats immediately punctured the risk-on sentiment that had dominated markets for weeks, causing investors to reassess their exposure to riskier assets. Traditional safe havens also responded to the uncertainty, with gold prices spiking as Treasury yields moved lower. Wall Street indices opened in negative territory, reflecting the broader market anxiety about potential trade escalation.
As investors seek alternatives to sovereign assets amid growing risks to the U.S. dollar and global economic stability, Bitcoin continues to position itself as digital gold. The crypto selloff comes at a particularly sensitive time for the digital asset sector, which has been riding high on expectations of favorable regulatory treatment under the Trump administration, following the creation of state crypto reserves and the approval of stablecoin legislation under the GENIUS Act.
This shift highlights how crypto markets, despite their decentralized nature, remain deeply susceptible to traditional geopolitical and economic policy decisions that can quickly override sector-specific positive developments.
While conceptually a renewed trade war could eventually benefit altcoins by provoking greater interest in decentralized systems, ramifications appear much less direct. In the near term, reduced risk appetite among investors appears likely to continue weighing on altcoin valuations, particularly as Bitcoin’s market dominance expands during periods of uncertainty.
