Smaller cryptocurrencies have experienced steeper declines compared to Bitcoin following President Donald Trump’s announcement of new tariff plans on Wednesday. far more serious than anticipated —as investors reduced their exposure to more volatile digital assets.
On Thursday, Bitcoin was trading near $82,312, marking a decrease of about 1.4% from the previous week, as reported by the Dow Jones Market Data. This price stood approximately 25% lower than its peak value of $109,225 recorded on January 20, which coincidentally was Donald Trump’s inauguration day.
Although Bitcoin experiences significant volatility, it is frequently considered a "blue-chip" asset in the cryptocurrency realm due to having both the highest market capitalization and superior liquidity compared to all other digital tokens.
In the meantime, smaller tokens experienced an even greater decline, with Ether dropping by 10.4% in the last week. On Thursday, the Ether-to-bitcoin ratio hit a four-year low of approximately 0.02, following a decrease of more than 56% over the course of the previous year.
Over the last seven days, Solana saw a decline of 16.3%, XRP dropped by 12.4%, and Cardano retreated by 12.6%.
Consequently, Bitcoin’s dominance – which measures thecoin’s market capitalization compared to the entire cryptocurrency market – surged to an peak of 63% on Thursday, marking the highest point since February 3rd.
"I believe you're still seeing strong activity in the Bitcoin market, whereas some of the altcoins aren't showing similar resilience," explained Max Bareiss, who leads lending operations at Galaxy, during a telephone conversation. Altcoins usually surpass Bitcoin in bullish markets but fall short compared to Bitcoin in bearish conditions.
Moreover, the market dynamics for Bitcoin have shifted significantly since ETFs began direct investment in the asset last year—driven now by demand from retirement accounts, macro funds, and firms like MicroStrategy Inc., according to Eric Chen, co-founder of Injective Labs.
Although ether ETFs were introduced last year, they haven't attracted as much interest as their Bitcoin equivalents. So far, U.S. regulatory authorities have solely greenlit ETFs that invest directly in Bitcoin or Ether.
The pressure on lesser-known cryptocurrencies is exacerbated by the fact that some investors trading these digital coins might also be involved in heavily margined equity accounts, as stated by Peter Eberle, the chief investment officer at crypto investment company Castle Funds.
"As the stock market collapses, these investors encounter margin calls, placing them in a challenging position and compelling them to reduce their stakes across various asset categories," Eberle stated in an email.
U.S. stocks finished notably down on Thursday As the Dow Jones IndustrialAverage dropped by 1,679 points, which is equivalent to a 4% decrease, it closed at 40,545. The S&P 500 finished with a decline of 4.8%, and the Nasdaq Composite shed 6%.