Crypto market shakes as US tariffs & hacks hit confidence

The cryptocurrency market experienced significant fluctuations in March as a combination of global events influenced investor strategies, according to the Binance Australia Monthly Crypto Market Wrap.

A decrease of over 20% in global crypto market capitalisation marked the month, driven by increasing U.S. trade tensions, a slump in the broader equity market, and a substantial exchange hacking incident. This environment caused some investors to reconsider their positions within the digital asset ecosystem. Notably, stablecoins reached record levels, with market caps hitting an unprecedented USD $224 billion, an indication of investors' shift towards safer assets rather than a full exit from the market.

The confirmation of new U.S. tariffs sparked market instability. U.S. President Trump announced the imposition of a 25% tariff on imports from Canada and Mexico and a 10% tariff on China, contributing to decreased investor confidence into March. The trade policy uncertainties led to sharp movements in risk assets, negatively affecting Bitcoin and related cryptocurrencies. The global crypto market value fell from USD $3.6 trillion to USD $2.8 trillion as traders sought to reduce risk exposure.

Traditional equity markets resonated with this trend, with declines in major technology stocks like NVDA, GOOGL, and AMZM. The continuing policy uncertainty caused a shift towards more stable assets, pausing the optimism that had characterised the start of the year.

The delay in the Trump administration's launch of a national Bitcoin reserve plan further contributed to market instability. What was anticipated as a positive development for crypto markets instead resulted in uncertainty. This led to Bitcoin losing 16% of its value, and liquidations nearing USD $3 billion from February 24-26, marking its steepest fall since the FTX collapse.

"The convergence of macroeconomic and security challenges in recent weeks has certainly tested the market's resilience," said James Quinn-Kumar, Director of Community Engagement at Binance Australia. "Sudden tariff moves and events like the Bybit incident prompted many to pull back on risk in the short term. However, it's important to note that we aren't seeing people give up on crypto altogether. Instead, they're taking a more defensive stance until the storm passes."

Amidst these turbulent market conditions, stablecoins have emerged as a significant means of preserving capital. Their market capitalisation exceeded USD $224 billion, marking an approximately 10% growth since the beginning of the year, contrasting with the crypto market's overall decline of over 13%. Investors focused on stablecoins to manage short-term market volatility while maintaining a presence in the crypto ecosystem.

Industry assessments suggest that evolving U.S. regulatory frameworks surrounding stablecoins have enhanced confidence in these digital assets. Many traders preferred to hold value in stablecoins rather than converting to traditional currencies, positioning themselves to re-engage with riskier assets when market conditions stabilise.

Similar trends were observed in the Australian crypto market, where trading patterns shifted. Bitcoin regained prominence among Australian traders on Binance Australia in March, as interest in altcoins and speculation cooled from earlier highs. Noteworthy reductions in trading were observed in assets like Trump's memecoin ($TRUMP) and XRP, which both saw declines in trader numbers.

Solana (SOL) maintained strong engagement, ranking among the top three traded coins, outpacing even Ethereum in trader activity in Australia. "The pullback in hype-driven trading, like the memecoin frenzy, indicates a maturing perspective among Australians," said Mr. Quinn-Kumar. "We're seeing our community here choose stability and fundamentals over short-term fads when volatility picks up. The fact that stablecoins and Bitcoin usage are rising indicates a move back towards established cryptocurrencies and lower-volatility assets, while still maintaining involvement in the market through strategic asset rotation."