How Trump’s Tariffs Pump Volatility and Dump Crypto Exchanges’ Capitalizations

“What sets this year apart is the somewhat unexpected timing of volatility,” believes JPMorgan’s Eddie Wen.

Indeed, since Trump took office, the volatility in the market has been notoriously high within the local trend. The potential reasons for this – Trump’s tariffs and recent market shake-offs. 

Crypto Volatility Index (CVI).

As markets adjust to the political shift, the fundamental question remains: Is Trump’s presidency a turning point for crypto legitimacy, or does it mark the beginning of a new era of politically-driven speculation?

When It’s All Began

The market’s volatility was evident even before Trump officially took office. Following his election victory, Bitcoin surged from $68,000 in November 2024 to over $100,000 by December.

This so-called “Trump Bump” injected nearly $2 trillion into the crypto market, pushing total capitalization to a record $3.29 trillion. To sum up: while investors were expecting a pro-business administration, they drove one of the fastest rallies in history.

Days before inauguration, Trump and his family launched meme coins, $TRUMP and $MELANIA. The $TRUMP token skyrocketed from $3 to $70, reaching a $14 billion market cap. However, 80% of its supply is reportedly controlled by Trump-affiliated entities, fueling manipulation concerns.

The numbers, however, reveal a more complicated picture: 80% of the supply is reportedly controlled by Trump-affiliated entities, raising concerns over market manipulation. What is more, according to Coinbase chief product officer Conor Grogan, Trump could have made more than $800 million from his token.

The lack of transparency in ownership and potential price engineering raise questions about whether his administration’s crypto stance is driven by policy—or personal financial gain.

Trade War Shake-Off

The Trump administration’s latest trade tariffs have rattled global markets, with cryptocurrencies bearing the brunt of the impact.

A 25% tariff on Canadian and Mexican imports, a 10% levy on Chinese goods, and potential duties on European exports have heightened economic tensions. In response, Canada enacted immediate countermeasures, while China and Mexico prepared retaliatory actions, fueling uncertainty.

The crypto market reacted sharply, with Bitcoin dropping nearly 14% to a low of $91,441 before stabilizing above $94,000. Ethereum plunged 24%, hitting its weakest point since September, while XRP and Dogecoin lost over 30%. 

Notably, Trump-related tokens also fell, with the Official Trump Coin down 15% and Melania Trump’s meme coin slipping 12%. Liquidations surged, wiping out $2 billion in leveraged positions within 24 hours. Meanwhile, crypto stocks, including Coinbase and MicroStrategy, dropped over 5%, underscoring the sector’s exposure to shifting economic policies.

How Trump Took Over Market Volatility

The latest tariff-induced market turbulence has deepened volatility across the cryptocurrency landscape, as institutional traders and analysts grapple with shifting economic conditions.

A JPMorgan report now identifies inflation and tariffs as the primary market drivers for 2025, while 41% of traders cite heightened volatility as their biggest challenge—up from 28% last year. 

What sets this year apart is the somewhat unexpected timing of volatility,” said Eddie Wen, JPMorgan’s global head of digital markets, in an interview to Bloomberg. “Markets are reacting to news headlines in surprising ways, and I expect this trend to continue in the current climate.”

What is more, with the S&P 500’s potential for a 5-10% decline, David Kostin, a strategist at Goldman Sachs, warns of further pressure on crypto assets.

Remarkably, trading volumes have surged, particularly in currencies linked to Trump’s tariff targets—Canada’s dollar, Mexico’s peso, and China’s yuan—underscoring the broader financial spillover. 

The impact touched cryptocurrency exchanges as well – yet conversely. Since December 20, 2024, the trading volumes of the leading crypto operators plummeted at least 20%. Namely, on February 7, Binance saw a 23% drop, U.S.-based Coinbase – 29.1%, while EU-centred WhiteBIT – 21.3% in the last 24 hours, according to CoinGecko.

This broadly reflected on crypto exchanges’ virtual capitalisation, as per the formula by CoinCodex’s Adam Watts. As it directly stems from the average trading volume, this by far may pin Trump’s factual controversies between his pro-Web3 political agenda and actual impact.

Thus, according to the formula, which derives from Coinbase’s market value ($68 billion as of February 7), since Trump took office, the virtual capitalisation of the top exchanges has endured following drops:

• Binance: $170 billion (from $220 billion in December 2024)
• Bybit: $32 billion (from $43.9 billion in December 2024)
• WhiteBIT: $30 billion (from $38.9 billion in December 2024)
• Kraken: $9 billion (from $13 billion in December 2024) 

This indicates that despite the announced efforts to streamline crypto into mass adoption, Trump’s factual stance may cause a contrary effect – specifically, through weakening a digital operator niche while spurring outflows and restraining potential trading operations.

In a nutshell – plummeting the core drivers of the nowadays Web3-businesses, as well as injecting volatility to increase the risks and, henceforth, sending a mixed message to the crypto enthusiasts. 

One Man In Charge Of It All

Once considered a hedge against economic instability, digital assets are now increasingly reactive to geopolitical and macroeconomic developments. And, undoubtedly, Trump’s administration sees the perspective clear. 

This comes as an even louder precedent with crushing the functional operability of the leading crypto exchanges by getting their virtual cap diminished, which remains the main source and transmitter of liquidity into the Web3 industry. Should this mechanism plummet, blockchain-oriented businesses should lose their touch not only with users, but with their core investors.

Each Trump decision seems to plummet the market, while another one puts a healing patch upon it. This underlines that in the age of global wealth redistribution, market volatility is becoming the core of Trump's policy – but not the initial tech incentivisation, as one stated. 

The only question is: will it strengthen the politically-driven speculation globally, or is Trump taking a solo charge upon it? 

Info Notice: The original article is published on CoinMarketCap.