In a move that sent shockwaves through financial markets, U.S. President Donald Trump announced a fresh round of tariffs on Sunday, targeting steel and aluminum imports. The news immediately put crypto traders on edge, with many fearing the economic uncertainty could breed downside volatility, particularly for Ethereum’s ether (ETH) and related bets like dogecoin (DOGE).
Tariffs Reignite Economic Uncertainty
Trump’s tariff bombshell included a 25% levy on steel and 10% on aluminum, with the president promising additional reciprocal tariffs in the coming week. The aggressive trade posturing threatens to reignite simmering economic tensions and trade war fears. For crypto markets still licking their wounds after a brutal 2022, the specter of renewed volatility was unwelcome news.
Tariffs introduce economic uncertainty by potentially escalating trade wars, which can lead to market volatility — such events tend to impact bitcoin and the broader crypto market as investors tend to move away from risk assets to safer investments.
Ether in the Crosshairs
For ether, the tariff news could hardly come at a worse time. The second-largest cryptocurrency has endured a tumultuous year, with short interest soaring and a declining bitcoin-ether ratio signaling waning confidence. Year-to-date, ETH is down 23% versus bitcoin’s 2.5% gain, painting a stark divergence in fortunes. Some traders fear the tariffs could accelerate ether’s slide.
The rise of BTC vs everything else is the most evident in comparison with ETH, which is seeing record short-interest and FUD with the 2nd largest token being down -23% YTD vs a +2.5% gain in BTC. At the risk of sounding like a broken record, but a lack of L1 catalysts and narrative leadership will likely continue to weigh on Ethereum in the foreseeable future.
– Augustine Fan, Head of Insights at SignalPlus
The prospect of ether extending its slide has knock-on effects for the broader Ethereum ecosystem. Ethereum-based DeFi tokens and even memecoins like dogecoin often mirror ETH’s price action, potentially setting them up for a sympathetic slump if economic jitters persist.
Dogecoin in the Doghouse?
Dogecoin, the meme-powered crypto that often rides ether’s coattails, looks particularly vulnerable amid the uncertainty. With ether under pressure, even doge’s lighthearted charm may not spare it from an anxiety-driven sell-off. As a more speculative asset even by crypto standards, DOGE tends to suffer disproportionately when risk appetite recedes.
Ethereum has been hit particularly hard as ETH reversed its entire pump from late November last year, unwinding any gains to holders. Meanwhile, traders at Singapore-based QCP Capital expect crypto markets to flip-flop in the coming weeks as Trump’s words continue to impact markets.
– Nick Ruck, Director at LVRG Research
Fading Bullish Catalysts
Beyond the direct tariff fallout, crypto analysts are lamenting the lack of countervailing bullish catalysts to steady the ship. With inflation expectations creeping higher, traders see vanishing odds for Federal Reserve interest rate cuts this year. Absent any dovish monetary policy shifts, the bearish narrative gains momentum.
- Traders expect only one Fed rate cut in 2025, down from previous estimates
- Lack of Layer-1 catalysts and narrative leadership weighing on Ethereum
- Put option buying increases as traders hedge against crypto downside risks
The convergence of Trump tariff jitters and fading bullish catalysts has crypto traders bracing for turbulence ahead. With ether and dogecoin looking vulnerable, the near-term sentiment is skewing decidedly cautious. While some welcome the return of volatility, the balance of risks seems tilted to the downside for now.
A feedback loop is emerging—President Trump, highly sensitive to market reactions, is facing a market increasingly calling his bluff. This could embolden him further, adding another layer of volatility. BTC volatility now skews in favor of puts until April, reflecting a lack of upside catalysts.
– QCP Capital
Preparing for the Uncertain Road Ahead
For ether, dogecoin and the broader crypto complex, the Trump tariffs introduce a fresh source of uncertainty in an already fragile market. The key will be whether the economic anxiety proves transitory or triggers a more enduring risk-off phase. In the meantime, traders are battening down the hatches and preparing for the volatile voyage ahead.
