President Trump’s Tariff Letter Causes 4.5% Drop in Crypto Markets, Stocks Drop Following

The cryptocurrency market experienced a sharp decline, dropping 4.5% in the past 24 hours, following President Donald Trump's announcement of new tariffs targeting several countries.

Simultaneously, cryptocurrency stocks and publicly listed Bitcoin mining company stocks also suffered significant losses.

Crypto market plummets as Trump sends latest tariff letters

On July 7th, President Trump sent tariff letters to 14 countries, applying tariffs ranging from 25% to 40%. South Korea and Japan were the first countries to receive the new letters. Shortly after, he sent nearly identical notifications to 12 other countries.

These countries include Tunisia, Kazakhstan, Serbia, Bosnia, Myanmar, Laos, Bangladesh, Malaysia, Cambodia, Thailand, Indonesia, and South Africa.

"US Treasury Secretary Bessent stated that over 100 countries have not responded to US tariffs with trade agreements. All these countries are expected to receive tariff letters," The Kobeissi Letter revealed.

In the letters, Trump expressed concerns about the trade deficits the United States has with these countries. He also warned that any retaliatory actions would be countered with additional tariff increases.

Economist Peter Schiff criticized this move, arguing that Trump's letters reflect a fundamental misunderstanding of trade. He argued that tariffs are not related to the US trade deficit with Japan or South Korea.

"Japan's tariffs on US goods average below 2%, and South Korea's average below 1%. Our trade deficit is because South Korea and Japan produce more goods that Americans want to buy than goods we produce that they want to buy. Trump's 25% tariffs will have minimal impact on our trade deficit with both countries. In fact, as the dollar weakens, our trade deficit may increase in dollar value, as we'll pay more for less imports," Schiff said.

However, Trump's tariff imposition has damaged the cryptocurrency market. Data from BeInCrypto shows the total market capital decreased by 4.5% in the past day. All top ten coins experienced price drops.

Bitcoin (BTC) dropped 1.56% below 108,000 USD. At the time of writing, it was trading at 107,688 USD. Ethereum (ETH) decreased 1.89% to 2,535 USD. Dogecoin (DOGE) suffered the largest decline at 4.78%.

Beyond cryptocurrencies, cryptocurrency-related stocks were also impacted. Data from Google Finance shows MicroStrategy Class A MSTR closed with a 2% decline, while Robinhood dropped 1%. Moreover, Bitcoin mining company stocks experienced even steeper declines.

The tariff letters also affected the US stock market. Data from CNN shows Dow Jones dropped 422.17 points, S&P 500 declined 49.37 points, and NASDAQ fell 188.59 points.

"Like clockwork: Trump's 'tariff letter' goes out, and 10-year bond yield returns to 4.40%. Yield is only ~20 basis points below the high when President Trump announced a 90-day tariff pause. We've reached a point where yields rise regardless of trade war situation. Deficit spending has completely controlled long-term interest rates. The market is clear," The Kobeissi Letter posted.

Meanwhile, the cryptocurrency and stock market declines reflect previous tax-related volatility instances. In April, US-China trade pushed Bitcoin below 80,000 USD, causing large liquidations.

With new tariffs expected to take effect on August 1st, expectations of further price drops are not far-fetched. Additionally, the low probability of Fed rate cuts could drive negative sentiment. BeInCrypto previously reported that this probability has dropped below 5% for a July rate cut.

The tariff letters have now impacted September possibilities. According to the CME FedWatch tool, the likelihood of a September rate cut has decreased to 61.9%, marking a significant drop from 90% just two weeks ago.

All these factors, from Trump's new tariffs, market's negative reaction, to changing expectations about Fed rate cuts, combine to create an environment of increasing uncertainty.