Bitcoin, the world’s largest cryptocurrency, saw a dramatic decline of 9.47% on Monday, March 3, dropping to $85,321.69 as investors reacted to rising concerns over an escalating trade war and uncertainty surrounding a proposed US cryptocurrency reserve.
Market Sell-Off and Investor Panic
The sharp drop in Bitcoin’s value occurred as a widespread sell-off sent shockwaves throughout the digital asset market, putting over a trillion dollars of total market valuation at risk. By Tuesday morning (March 4) IST, Bitcoin’s price had further declined to $83,165.06. The sell-off was not limited to Bitcoin—Ether, XRP, Cardano, and Solana also experienced significant declines, with Ether falling more than 15% and XRP, Cardano, and Solana dropping nearly 20%.
The Reserve Riddle
The market turmoil began after a brief surge in digital asset prices when former President Donald Trump proposed the creation of a national strategic cryptocurrency reserve. The plan would involve the government stockpiling digital assets, particularly those seized in legal actions or linked to sanctioned entities. However, skepticism quickly spread among investors who questioned the feasibility of such a reserve gaining congressional approval. “Everyone started buying, then wondered if it was really going to happen,” noted Adam Button, managing director at Forexlive. He emphasized that while Trump had named potential reserve assets including Bitcoin, Ether, XRP, Cardano, and Solana, the idea remains distant from becoming a legislative reality.
Trade War Tensions Exacerbate Market Uncertainty
Further compounding the market’s woes were confirmation of 25% tariffs on all imports from Mexico and Canada by Trump, sparking threats of retaliatory measures from both nations. Analysts believe that these trade tensions, combined with growing concerns over slowing US economic growth, contributed to an overall risk-averse sentiment among investors, accelerating the sell-off across the cryptocurrency market.
Industry Opinions and Future Outlook
In light of the uncertainties, some industry leaders have expressed doubts about the proposed reserve’s structure. Coinbase CEO Brian Armstrong suggested that limiting the reserve to Bitcoin might be the best approach, calling it “the simplest” option, and comparing it to gold in terms of stability. Meanwhile, experts continue to monitor both the trade war developments and legislative hurdles that could impact the future of digital asset regulation in the United States.