Bitcoin Plunges as Trump Sparks Recession Fears Amid Escalating Trade War

Crypto Market in Turmoil as US-Canada Trade Tensions Shake Investor Confidence

Bitcoin and the broader cryptocurrency market took a hit late Sunday as fears of an impending recession and rising trade tensions between the United States and Canada sent investors into a selling frenzy.

Former President Donald Trump, speaking on Fox News' Sunday Morning Futures, sidestepped direct questions about a possible 2025 recession, stating he disliked making such predictions. However, he defended his economic policies, claiming they are designed to bring prosperity back to the US—though he admitted the transition could take time.

Trump’s controversial trade stance, which includes tariffs on imports from Canada, Mexico, and China, has fueled market uncertainty. He maintains these measures are essential for achieving his economic objectives, despite the volatility they introduce.

New Canadian Prime Minister Escalates Trade Feud with Trump

Adding fuel to the fire, Canada’s political landscape shifted on March 9 as Mark Carney, former governor of the Bank of Canada, won the Liberal Party leadership election, replacing Justin Trudeau as prime minister. Carney wasted no time in taking aim at Trump, vowing that Canada would not back down in the ongoing trade dispute.

“America is not Canada. And Canada never, ever, will be part of America in any way, shape, or form,” Carney declared in his first speech as prime minister-elect. His comments came in response to Trump’s repeated references to Trudeau as the "Governor" of Canada, suggesting the country would be better off as the 51st US state.

Carney also announced that Canada would maintain its retaliatory 25% tariffs on US consumer goods until Washington shows "respect." These escalating tensions have deepened concerns over economic instability, further rattling financial markets.

Bitcoin Sinks Below $81,000 as Crypto Market Bleeds

The impact of these political and economic developments was immediately felt in the cryptocurrency space. Bitcoin tumbled below $81,000 following Carney’s victory, according to CoinGecko data, before recovering slightly above $82,000—still down 4% over the past 24 hours.

Altcoins suffered even steeper losses. Ethereum (ETH) and XRP plunged over 6%, while Dogecoin (DOGE) crashed by more than 10%. Other major tokens, including Binance Coin (BNB), Solana (SOL), Cardano (ADA), and TRON (TRX), also faced heavy declines. Smaller-cap cryptos like Injective (INJ), Maker (MKR), and Render (RNDR) recorded double-digit drops.

The total crypto market capitalization shrank by 6% in a single day, falling to $2.8 trillion. Meanwhile, leveraged liquidations soared to $600 million, with long positions bearing the brunt—accounting for $530 million in losses, according to Coinglass data.

US Recession Fears Mount Amid Economic Uncertainty

Market jitters intensified after the Atlanta Federal Reserve's GDPNow model revised its outlook for Q1 2025, predicting a sharp 2.4% contraction. Weaker-than-expected consumer spending and a widening trade deficit have fueled growing concerns that the US economy may be heading into a downturn.

Adding to the unease, Trump’s recent executive order to establish a Strategic Bitcoin Reserve has created uncertainty in the crypto market. The lack of details surrounding the funding process initially triggered selling pressure.

US Treasury Secretary Scott Bessent later attempted to reassure investors, stating that discussions on additional Bitcoin acquisitions are ongoing. However, he emphasized that the immediate priority is halting the sale of government-seized BTC. While some analysts see the reserve’s creation as an acknowledgment of Bitcoin’s strategic value—similar to gold—this recognition has yet to translate into sustained market confidence.

Mixed Reactions to White House Crypto Summit

Following Trump’s executive order, the White House hosted a Crypto Summit, drawing mixed reactions from industry leaders.

Chainlink co-founder Sergey Nazarov welcomed the event, calling it a positive sign that US officials are engaging with blockchain and crypto innovation. “Me and other people in the room do believe that crypto, blockchain, and Web3 infrastructure represent the next iteration of the financial system,” Nazarov stated. “And I think the US should maintain its leadership position in this new financial system.”

Multicoin Capital’s managing partner Kyle Samani echoed this sentiment, calling the summit a “historic moment” for the crypto industry.

However, not everyone shared their enthusiasm. Coin Bureau CEO Nic Puckrin and Bitcoin maximalist Justin Bechler criticized the summit’s impact, questioning whether it would lead to meaningful policy changes or just serve as a political spectacle.

As economic uncertainty lingers and geopolitical tensions escalate, both traditional and crypto markets remain on edge, with investors bracing for further turbulence in the weeks ahead.