'Exacerbated Volatility': Why Donald Trump's Politics Are Dealing a Big Blow to Bitcoin

Bitcoin fell sharply below $90,000 on Tuesday as uncertainty over Donald Trump's wild statements hit risk assets, while the dollar remained flat.

At around 10:20 GMT (11:20 in Paris), bitcoin, the most capitalized cryptocurrency, fell by 7.14% to $87,248.81, shortly after falling to $86,865.84, its lowest since mid-November. Ether, the second digital currency in total value, fell by 10% to $2,372.62.

The decline is "a sign that the current environment of heightened volatility is not conducive to gains for cryptocurrencies," summarizes Kathleen Brooks, an analyst at XTB. The dollar is also holding its breath on Tuesday, awaiting the next developments in geopolitics and trade policy. It is down just 0.01% against the euro, at $1.0469.

Digital assets had initially benefited from promises of a second term from Donald Trump, who had established himself as a fervent defender of the sector.

The prospect of more favorable regulation and the creation of a strategic national reserve of bitcoins had propelled this crypto to a record price of $109,241.11 on January 20, a few hours before the inauguration of the American president.

But while he has remained favorable to the crypto sector since coming to power, Donald Trump is generally maintaining an uncertain climate that is cooling investors.

In particular, he reversed American policy towards Ukraine, multiplying the invectives towards its president Volodymyr Zelensky, going so far as to attribute responsibility for the war to him, and negotiated directly with Russia, leaving kyiv and the Europeans on the sidelines.

Despite huge differences that persist on the substance, French President Emmanuel Macron said on Monday that he was "convinced" that there was a "path" with Donald Trump to end the war in Ukraine.

During a press conference with Emmanuel Macron on Monday, his American counterpart affirmed that his plan to impose new customs duties on Canada and Mexico was "progressing on schedule."

Donald Trump had announced the implementation of 25% customs duties on all Canadian and Mexican products before reversing course in early February, a few hours before they came into effect, by granting a 30-day reprieve to the two countries.

Add to that "the steel and aluminum tariffs scheduled for later in March, then the semiconductor and pharmaceutical tariffs starting April 2, and finally the reciprocal tariffs starting April 12," and that raises "the risk of increased volatility in financial markets," said Derek Halpenny, an analyst at MUFG.