The cryptocurrency market was thrown into turmoil on Tuesday as major tokens, including Cardano’s ADA, XRP, and Solana’s SOL, plummeted by 21% to erase gains accrued by President Donald Trump’s surprise announcement of a U.S. crypto strategic reserve.
The sharp downturn followed a brief surge that saw ADA rise over 60%, XRP climb 33%, and SOL jump 22% within hours of the announcement.
Trump on Sunday had proposed a government-backed crypto stockpile that would include ADA, XRP and SOL alongside Bitcoin (BTC) and Ether (ETH).
While the declaration initially bolstered the cryptocurrency market with market analysts calling ita potential game-changer that could legitimize digital assets and accelerate institutional adoption.
However, the optimism was short-lived as the market immediately reversed the previous gains following the announcement of new tariffs on China, Canada, and Mexico import goods.
“Trump’s latest tariff announcements on Canada, Mexico, and China caused a massive selloff of crypto assets, completely reversing the previous day’s crypto strategic reserve gains,” said Kevin Guo, director of HashKey Research, in a Telegram message. “Despite a slew of pro-crypto deregulation initiatives and supportive policies, investors view cryptocurrencies as risk assets strongly bound by the performance of the US equity market.”
The downturn extended beyond ADA, XRP, and SOL. Bitcoin dropped 9% in the past 24 hours, trading at $84,000, while Ether lost 12% to hover just above $2,000 — its lowest since 2023.
The selloff coincided with an announcement from China imposing a 15% tariff on various U.S. imports following Trump’s decision to double tariffs on Chinese goods to 20%.
The U.S. president also confirmed that 25% tariffs on goods from Mexico and Canada would take effect immediately.
Analysts noted that the escalating trade tensions contributed to the bearish sentiment engulfing the crypto markets.
Trump’s crypto reserve proposal was initially seen as a bold step towards integrating cryptocurrency into the U.S. financial system.
However, the timing of the announcement amid escalating geopolitical tensions and trade disputes, now appears to have backfired.
Harry Tchilinguirian, head of oil research at Onyx Commodities Ltd., described the move as poorly timed.
“The optics around any reinstatement of supply, even if incremental and small, will be seen as price-negative,” he said.
This sentiment was echoed by several market analysts who argued that the combination of crypto regulatory uncertainty and a potential trade war was too much for the market to digest.
