Bitcoin Gains Market Share as Altcoins Struggle Amid Trade War Fears

Bitcoin’s dominance in the crypto market surged past 60% on February 2, coinciding with a broader downturn across digital assets following the latest trade tariffs imposed by U.S. President Donald Trump.

The shift in market sentiment led to heavy losses for altcoins, with Ethereum sliding 9.3% over the past week, XRP and Solana suffering major declines.

The newly introduced tariffs added fresh volatility to global markets. The U.S. imposed a 25% duty on Canadian imports, an identical tariff on all goods from Mexico, and a 10% levy on Chinese products. These measures triggered retaliatory tariffs, fueling concerns over rising inflation and prolonged high interest rates throughout 2025. In response, investors pivoted away from riskier assets like cryptocurrencies in favor of U.S. government bonds.

Market analysts have warned that the volatility may not be over. Crypto trader Van Nuener cautioned that the reopening of U.S. futures markets on February 2 could lead to further downside, suggesting that Bitcoin and other digital assets might follow traditional markets lower. Meanwhile, BitMEX co-founder Arthur Hayes previously speculated that optimism surrounding Trump’s election would fade as traders realized that crypto-friendly policies would take time to materialize.

Adding to market uncertainty, the crypto and tech sectors have been under pressure following the recent release of DeepSeek R1, a China-developed open-source AI model that rivals leading systems from OpenAI. The model, which was trained at a fraction of the cost using older hardware, has been described as a disruptive force in the AI industry. The U.S. government is now weighing even stricter export controls on Nvidia chips to China, further stoking uncertainty in financial markets.