Bitcoin Plummets as Market Uncertainty Intensifies

NEW YORK, 4 March 2025 (BSS/AFP) – The value of Bitcoin tumbled nearly 10 per cent on Monday as escalating trade tensions and uncertainty surrounding the creation of a US cryptocurrency reserve fund spurred investors to retreat from risk.

Initially buoyed by US President Donald Trump’s suggestion of establishing a national cryptocurrency reserve, Bitcoin and other digital assets plunged amid growing scepticism about whether such a plan would materialise.

“Everything is being sold,” said Adam Button, a manager at Forexlive. “A de-risking process is unfolding among crypto investors.”

By the end of the trading day, Bitcoin had fallen 9.47 per cent to $85,321.69. Despite the decline, Bitcoin’s total market capitalisation remains above the trillion-dollar mark, retaining its status as the largest cryptocurrency.

Ether, the second-largest digital currency, suffered an even steeper drop, losing over 15 per cent of its value. Meanwhile, major altcoins such as XRP, Cardano, and Solana saw their prices slump by nearly 20 per cent.

Adding to the pressure on the cryptocurrency market was Trump’s confirmation of a 25 per cent tariff on all imports from Mexico and Canada, prompting immediate vows of retaliation from both countries.

According to Button, concerns about the trade war have been compounded by fears of a slowdown in US economic growth, with many analysts expecting a weaker first quarter.

Cryptocurrency prices had initially surged earlier on Monday after Trump publicly identified five digital assets—Bitcoin, Ether, XRP, Cardano, and Solana—as potential candidates for inclusion in a national strategic reserve fund.

The proposed reserve would be composed of digital currencies already held by the US government, primarily those seized in legal cases or assets belonging to sanctioned individuals and entities.

However, industry experts have raised concerns over the selection of cryptocurrencies. Brian Armstrong, the chief executive of Coinbase, one of the largest US crypto exchanges, suggested that Bitcoin alone should be considered for the reserve.

“Bitcoin would probably be the best option,” Armstrong posted on X. “It’s the simplest and has the strongest case as a successor to gold.”

Market analysts suggest that initial excitement over Trump’s proposal triggered a wave of buying before investors began questioning its feasibility.

“The moment Trump mentioned a crypto reserve, people rushed to buy,” Button noted. “Then they paused and asked: ‘Is this actually going to happen?’”

For the plan to take effect, it would require approval from the US Congress—an outcome far from guaranteed.

“It’s easy to post about it on social media,” Button added, “but passing legislation is a completely different challenge. And right now, that seems like a long shot.”

Additional Context

• The volatility in the crypto market comes at a time when global regulators are increasing scrutiny on digital assets, with calls for stricter compliance measures.
• In recent years, several governments, including China and the European Union, have explored launching central bank digital currencies (CBDCs) to counteract the dominance of decentralised cryptocurrencies.
• Some analysts warn that a national crypto reserve, if implemented, could inadvertently legitimise Bitcoin and other digital assets as alternative stores of value, further challenging the traditional financial system.