In the volatile world of cryptocurrency, two major categories have been particularly affected by President Donald Trump’s new tariffs, according to a recent report by The Motley Fool. Layer 1 blockchain networks and meme coins have experienced significant downturns, with most top cryptocurrencies down at least 20% for the year.
Layer 1 Blockchain Networks Face Steep Declines
Layer 1 blockchain networks, which include some of the most established names in cryptocurrency, have been severely impacted by the current economic climate. Despite maintaining market capitalizations of $9 billion or higher and ranking among the top 15 cryptocurrencies globally, these networks have seen declining investor interest.
Ethereum, the second-largest cryptocurrency with a market value of approximately $220 billion, has been the worst performer among Layer 1 blockchains, dropping an alarming 46% year-to-date. This dramatic fall has occurred despite Ethereum’s historically strong performance over the past decade and its status as one of only two cryptocurrencies with a spot exchange-traded fund (ETF).
Other Layer 1 blockchains like Solana and Cardano have fared somewhat better but are still down about 20% on the year. Additional networks experiencing significant declines include Sui and Avalanche.
Interestingly, Ethereum still appears to maintain support from the Trump administration, which included it in the new U.S. Digital Asset Stockpile established in March. President Trump and other family members have publicly endorsed Ethereum on social media, and World Liberty Financial, a crypto company with Trump family affiliations, lists Ethereum as a prominent holding.
Also Read: Crypto Markets Roiled by Trump’s Mixed Tariff Signals as Bitcoin Slides
Meme Coins in Free Fall
Even more severely affected than Layer 1 blockchains are meme coins, which have seen catastrophic losses amid the risk-averse investment environment created by the tariff situation. Once popular with speculative investors, these coins have become what industry analyst Cathie Wood of Ark Invest recently described as “complete dumpster fires,” with predictions that many will soon become worthless.
Dogecoin, the largest meme coin by market capitalization, has fallen 45% this year. Shiba Inu, the second-largest, is down 37%, while Pepe has dropped 53%. Perhaps most striking is the Official Trump meme coin (TRUMP), which has plummeted 84% since its January launch.
Market signals clearly indicate investor retreat from meme coins, which were already considered highly speculative investments before the current economic uncertainty. Any occasional price increases are likely to represent “dead cat bounces” rather than meaningful recoveries, according to market analysts.
Investment Outlook Amid Tariff Uncertainty
As investors navigate this challenging landscape, Bitcoin remains the most resilient cryptocurrency in the face of economic and geopolitical uncertainty. With its established history of weathering economic downturns, Bitcoin could potentially serve as a hedge against global economic slowdown.
For those still looking for opportunities among beaten-down cryptocurrencies, Solana might warrant attention. Despite the current tariff environment, activity on the Solana blockchain appears to be increasing, and it has emerged as Ethereum’s primary challenger. Solana demonstrated its potential for dramatic growth in 2023 when it surged by more than 900%.
However, with concerns about recession, inflation, and potential trade wars looming, investor appetite for cryptocurrency investments remains generally subdued. The broader economic context created by President Trump’s tariff policies continues to cast a shadow over the cryptocurrency market, with only a select few digital assets managing to escape the worst of the downward pressure.
As this situation develops, cryptocurrency investors are advised to proceed with caution and consider the historical resilience of different digital assets when making investment decisions in this challenging economic climate.
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