Bitcoin, the world’s most valuable cryptocurrency, has dropped 2.67% on Monday morning and dragged down other crypto assets as well as shares of crypto-centric companies. The plunge is likely caused by investors moving on from riskier assets amid tariffs on imports from Mexico and Canada.
U.S. President Donald Trump signed an order on Saturday with which he imposed a 25% tariff on the majority of goods imported from Mexico and Canada. The U.S. and its neighboring countries previously enjoyed a free trade agreement since 1994.
Trump’s order also included a 10% tariff on imports from China, a move that the Asian country intends to dispute with the World Trade Organization. China, Mexico, and Canada accounted for 40% of all imports in the United States last year while the U.S. did an estimated $1.6 trillion in business with these three trading partners.
There is a belief that the tariffs could spill into a trade war, which is why investors are deciding to back off riskier assets like crypto until they see the full effects. Further weakening of major coins is expected in the near future, although some experts believe the tariffs could be beneficial to crypto in the long run.
Bitcoin slipped below $93K late on Sunday before recovering to $95K early Monday morning. Ether, the world’s second priciest cryptocurrency, had it even worse, dropping by more than 10% on Monday. It traded below $2,600 per coin compared to the $3,300 price from Friday.
The sell-off also reflected on publicly traded companies that have ties with crypto. Crypto exchange Coinbase saw its stock plunge by 6.74% in pre-market trading while Microstrategy, the world’s largest corporate holder of Bitcoin, is down by 8%.