Why is Crypto Down Today? Trump’s Tariffs Threaten Market Recovery

President Donald Trump announced a few hours ago that he will impose a 25% levy on auto imports as part of his agenda to “Make America Great Again”.

The head of state emphasized that these new tariffs will apply to all parts manufactured and imported to the U.S. and will be effective on April 2.

Government officials emphasized that this will produce over $100 billion in revenue in the near term and will force manufacturers to make changes to the supply chain that favor domestic production of key components.

However, for the financial markets, this is not good news as it increases the odds of high inflation in the near term.

If prices start to pick up as a result of this kind of decision, the Federal Reserve will take a more cautious approach when it comes to its monetary policy and could even scrap one of the two interest rate cuts that are currently on the table for this year.

Macroeconomic factors weigh heavily on cryptos valuation. The price of Bitcoin (BTC) and Ethereum (ETH) remains nearly unchanged in the past 24 hours and the same goes for their weekly performance.

XRP is the biggest loser in the top 5 on a weekly basis with a 7.3% retreat while Solana (SOL) has gone up by 4.4% in the past 7 days.

Meanwhile, meme coins have performed positively in the past week. Dogecoin (DOGE) has gone up by 10.2% during this period as it bounced from key support levels.

BTC Could Drop by 2.5% if It Losses This Support

Bitcoin’s hourly chart shows that the token is already hitting a critical area of support at $85,800 as the American session begins. A break below this threshold will likely accelerate the downturn and would result in a downside risk of 2.5% for BTC in the next few hours.

This level is also significant as a bearish breakout would confirm a short-term trend reversal.

Momentum indicators have plunged with the Relative Strength Index (RSI) already nearing oversold levels while the MACD’s histogram shows that negative momentum is accelerating.

On the other hand, if BTC bounces off this area during the American session. It would form a double-bottom bullish pattern that would favor the resumption of BTC’s uptrend.

Short-sellers have the upper-hand if such a break occurs as it would offer the highest risk-reward ratio if the stop price is set above the $85,800 level and the exit target at the nearest lower low.

ETH Bounces Off Key Support But Momentum Readings Favor a Bearish Outlook

The situation is similar with Ethereum (ETH) as the latter is bouncing off a key support after the beginning of the American session.

In the hourly chart, ETH has already made multiple lower highs and one lower low. However, the price action seems to have found support at the $1,985 for now. If this support holds, ETH could recover most of the territory as this latest drop could be considered a bear trap.

However, if the price dives below it, today’s losses would accelerate to around 3%. Short-sellers have the upper hand in this case as well as momentum is still favoring a bearish outlook.

The Relative Strength Index (RSI) has dropped below the signal line while the MACD’s histogram almost moved to negative territory in the past hour. A short position if a bearish breakout occurs would provide a 2.2 risk-reward ratio to scalpers.