Why Is Crypto Down Today? Bitcoin Plunges as Trump Tariffs Stoke Economic Concerns

Bitcoin fell below $88,000 on Tuesday morning, hitting its lowest level in three months as crypto markets reacted sharply to Trump's confirmation that tariffs on Canada and Mexico will proceed as scheduled next week.

Source: Bitcoin price chart

Source: CMC Global Charts

The broader crypto market shed nearly 10% of its total value in 24 hours, dropping to $2.91 trillion amid growing economic uncertainty.

Bitcoin (BTC) dropped to as low as $87,190 early Tuesday, according to data from CoinMarketCap, representing an 8% decline over the past 24 hours. This marks Bitcoin's steepest daily decline since January 25, when it lost 5.2% of its value in a single day.

The cryptocurrency had been trading in a consolidation range between $91,000 and $102,000 for nearly 90 days before breaking down through critical support levels. Technical analysts note that Bitcoin is now testing the lower boundary of its three-month consolidation range, with the next support level around $86,000, where the 200-day EMA is located.

The QCP Group highlighted that Bitcoin "finally broke out of its range, dipping below 90k for the first time in a month and now hovering just below that level, triggering over USD 200mm in liquidations over the past few hours."

Data from Coinglass reveals an even more severe impact, with total liquidations reaching $1.50 billion in the past 24 hours — $1.37 billion from long positions and $129.48 million from shorts.

Source: Coinglass

While Bitcoin's drop has been substantial, several major altcoins have experienced even more dramatic losses. Ethereum (ETH) plummeted 11.3% to $2,374, Solana (SOL) crashed 13.7% to $135.46, XRP fell 15.6% to $2.08, and Dogecoin (DOGE) tumbled 13% to $0.1192.

What Exactly Triggered This Sell-off

At a White House news conference with French President Emmanuel Macron on Monday, President Trump confirmed that his administration's planned 25% tariffs on imports from Canada and Mexico are moving forward next week when the month-long delay on their implementation expires.

"The tariffs are going forward on time, on schedule," Trump stated. "This is an abuse that took place for many, many years. The tariffs will go forward, yes, and we're going to make up a lot of territory."

In addition to the 25% tariff on most goods from Canada and Mexico, Trump plans a 10% tariff on Canadian energy products, and has also confirmed a separate 10% tariff on Chinese goods.

Trump has claimed these tariffs will generate revenue to reduce the federal budget deficit and create new jobs, stating, "Our country will be extremely liquid and rich again." However, most economists warn these costs will likely be passed onto American consumers, potentially accelerating inflation.

Bitcoin's price movement is increasingly mirroring traditional financial markets, according to a February 24 Alpha report from Bitfinex. The S&P 500 has dropped 2.3% over the past five trading days, while the Nasdaq Composite has fallen 4% during the same period.

Tech stocks have been particularly affected following reports that the Trump administration is seeking to tighten controls on chip technology exports to China, especially targeting Nvidia chips. This comes after Trump ordered increased scrutiny of Chinese investments in key U.S. sectors, further straining U.S.-China relations.

Foreign Affairs Minister Mélanie Joly indicated Canada will retaliate if Trump proceeds with the tariffs, saying the federal government has crafted a plan to impose counter-tariffs on up to $155 billion worth of American goods.

Why Solana Has Been Dumping This Week

Solana (SOL) has been particularly hard hit, dropping below $145 for the first time this year and extending losses to $133. This represents a 46.6% decline over the past 30 days, with several factors contributing to its pronounced weakness.

Source: CMC Solana Price page

A major catalyst for Solana's price decline is the upcoming March 1 token unlock related to FTX bankruptcy proceedings, which will release approximately 11.2 million SOL tokens into the market. This anticipated increase in supply has prompted some investors to sell preemptively, fearing dilution and downward pressure on SOL's value.

Additional smaller token unlocks are scheduled for April 1 (12,700 SOL) and May 1 (73,700 SOL), creating further selling pressure in the coming months.

On-chain data shows a sharp decline in Solana network activity, with active daily addresses dropping from 5.7 million to 3.5 million over the last four weeks. This exodus of users has impacted DEX volumes and network fees.

Solana's ecosystem has also been affected by several high-profile incidents that have damaged investor confidence. The LIBRA coin, which briefly reached a market cap of over $4 billion before losing more than 90% of its value, drained significant liquidity from Solana's memecoin market.

Additionally, the North Korean Lazarus Group reportedly leveraged Solana memecoins to launder $1.4 billion following the recent Bybit hack, further eroding trust in the network. Argentine President Javier Milei has also faced scandal and legal action related to his promotion of LIBRA, a token based on the Solana blockchain.

Another critical factor in the broader crypto market decline is the significant slowdown in institutional demand via spot ETFs.

The QCP Group raised concerns about the sustainability of institutional demand, noting that "recent BTC demand has been driven primarily by institutions like MicroStrategy financed through equity-linked note issuances." With crypto-related issuance accounting for approximately 19% of total issuance over the last 14 months, "the market for such financing may be nearing saturation — potentially dampening institutional demand if spot continues to stay muted." The analysts added that rising BTC dominance and sliding altcoin prices suggest that "alt bulls may already be fully long, with any new dollar inflows going exclusively into BTC."