Recent actions by US President Donald Trump has seen the cryptocurrency market enter a state of chaos, as a supposed 'tidal wave of fear' has caused an overall value drop of around half a trillion dollars overnight.
All reports appeared to suggest that Donald Trump's second term as US President would bring about a golden age for cryptocurrency, as prices reached record highs following his election victory and he even announced the creation of a working crypto advisory group, with a national reserve expected to come in the near future.
On top of all of this, Trump celebrated his inauguration with a personally branded meme coin, which catapulted over 500 individuals into millionaire status and only saw its rise eclipsed by another from his wife Melania.
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However, recent executive orders signed by Trump that place tariffs on Canada, Mexico, and China have caused historic disruption in the cryptocurrency market, crashing many coins into a fearful status and losing over $5 billion in just 24 hours.
As reported by the Independent, the market suffered its worst day in over a year with many of the major coins like Bitcoin, Ethereum, and Ripple suffering significant losses.
Bitcoin specifically dropped from around $105,000 on January 31 to a low of $93,000 on February 2, and while it did manage to climb back up beyond the $100,000 mark - likely due to it's status as 'digital gold' - it has since dropped back down below and continues to suffer instability.
Both Donald and Melania Trump's meme coins have also seen significant losses, seeing 33.37% and 27.59% drops across a seven-day period respectively according to CoinMarketCap.
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CoinMarketCap's 'Crypto Fear and Green Index' also shows the overall instability quite clearly, rating the current market at 38/100 - which is the first time that it's dropped into the 'Fear' zone since the start of October.
For comparison, the Index rated the post-election period as a time of 'Extreme Greed' with a peak rating of 88/100 due to the promises that Trump made surrounding crypto.
It shows the devastating ramifications of the imposed tariffs then that they've managed to tank the index so significantly, with worries continuing even after tariffs have been put on pause for both Canada and Mexico.
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Part of the reason for the dramatic effects seen in the crypto world is due to its status as almost a proxy stock market over the weekend when regular trading is impossible.
Traders then use key crypto coins in order to react to the news, proving their status as a riskier method that is far more reactive than traditional avenues, as explained by Mercuryo CEO Petr Kozyakov in an interview with the Independent:
"This once again underlines the highly speculative nature of meme tokens and the high risks that they pose to the uninformed," Kozyakov explains, indicating that a "tidal wave of fear, uncertainty and doubt" was released in line with Trump's tariff moves.