Cryptocurrencies and crypto-linked stocks have reportedly slumped alongside the S&P 500 Index amid traders’ concerns about a global trade war and a possible recession.
Bitcoin has lost more than 10% of its value and Ether has lost more than 45% since the beginning of the quarter, Bloomberg reported Monday (March 31).
The report added that four crypto industry stocks — Coinbase, Riot Platforms, Core Scientific and Galaxy Digital — have dropped below where they were on the day of the election of President Donald Trump.
Before their recent fall, both the cryptocurrencies and the crypto-linked stocks surged in value at the beginning of the year amid optimism about Trump’s election, the report said. The price of bitcoin hit a record high on the day of Trump’s inauguration.
The report attributed the recent drop to Trump’s trade wars unsettling the larger economy, and his actions on crypto falling short of crypto enthusiasts’ hopes, according to the report. While Trump created a strategic reserve of bitcoin, he did not authorize the use of taxpayer money to expand it, the report said.
The drop is not due to issues around crypto itself, as traders’ concerns about the economy have also driven the S&P 500 Index to what may be its worst quarter since mid-2022, per the report.
The report added that while some crypto enthusiasts consider bitcoin to be “digital gold,” the cryptocurrency has not been embraced as a hedge against inflation. While bitcoin has fallen, gold has had its best quarterly return since 1986, the report said.
It was reported in February that the global cryptocurrency markets had lost more than $800 billion in the previous few weeks as the crypto sector’s enthusiasm that came with Trump’s election victory began to fade.
At that time, traders were frustrated with Trump’s speed at following through on some of his campaign promises and concerned about the record hack of the Bybit cryptocurrency exchange.
Shortly before Trump’s inauguration on Jan. 20, it was reported that the price of bitcoin had surged 48% since the Nov. 5 presidential election due to Trump’s expected pro-crypto policies and a wider rally of riskier assets driven by investors’ expectations that the Federal Reserve would make further interest rate cuts.
