Tariff ruling failed to move the needle…‘fear of uncertainty’ spreads across the crypto market

The virtual asset (cryptocurrency) market, which had plunged on the back of the U.S. reciprocal tariff measures, is still showing no clear signs of recovery even after a court ruling found the tariffs illegal. The market is increasingly viewing the uncertainty created by the ruling—and its political fallout—as weighing on sentiment instead.

As of 5 p.m. KST on the 25th, CoinMarketCap data show bitcoin (BTC), the bellwether crypto, trading at $65,208, down 4.85% from a week earlier. At the same time, leading altcoins ethereum (ETH) and XRP (XRP) were also down 6.41% and 8.32%, respectively, from last week.

That is, market weakness has persisted even though the reciprocal tariffs were nullified by an illegality ruling.

On the 20th (local time), the U.S. Supreme Court ruled that the Trump administration’s reciprocal tariffs imposed since April last year under the International Emergency Economic Powers Act (IEEPA) were not lawful. The court’s reasoning was that imposing large-scale tariffs without explicit congressional authorization exceeds presidential authority.

The Trump administration has imposed steep tariffs on China, Canada and Mexico, among others, stoking risk-off sentiment across global financial markets. A notable example was Oct. 10, when President Donald Trump declared on Truth Social that he would impose an additional 100% reciprocal tariff on China, triggering large-scale liquidation of futures positions in the crypto market.

Yang Hyun-kyung, a researcher at iM Securities, said, “The Supreme Court’s ruling was to some extent anticipated by the market,” adding, “As a result, the invalidation of the tariffs had already been priced in to some degree even before the ruling.”

Tariff uncertainty widens…risk-off sentiment strengthens

A key reason the market has not taken the ruling as an unambiguous positive is the lingering possibility of additional tariffs.

In fact, immediately after the Supreme Court decision, Trump signed a proclamation invoking Section 122 of the Trade Act to impose an additional 10% tariff on all exports to the United States worldwide. He then said on the 21st that he would raise the rate to as high as 15%.

In addition, the Trump administration is reportedly exploring other avenues for imposing further tariffs, including Section 301 of the Trade Act and Section 232 of the Trade Expansion Act. In his state-of-the-nation address on the day, Trump said, “The tariff threat is a measure to save America,” adding, “A fully approved alternative is under review. Action by Congress will not be necessary.”

Some argue that the ruling has actually turned into a negative for the crypto market by amplifying uncertainty.

Ryan Lee, chief analyst at Bitget, said, “Risk-off sentiment is spreading through the market due to factors including tariff uncertainty and geopolitical tensions,” adding, “This is thinning liquidity in the crypto market.”

Crypto-focused outlet CoinDesk also said, “The crypto market is currently tightly linked to macroeconomic news,” adding that “until tariff policy becomes clearer, it is likely to move in line with shifts in risk-asset sentiment.”

Concerns over ‘lame duck’ for the Trump administration also weigh

The political fallout from tariffs is also a variable. If Trump’s political influence weakens—after having positioned himself as ‘pro-crypto’ since his time as a presidential candidate—it could affect momentum for crypto-related policies and, by extension, the market.

Yang Hyun-kyung of iM Securities said, “Given that President Trump has to some extent driven crypto policy so far, a drop in his approval rating could stoke concerns about an early lame-duck phase (a loss of governing clout), which could also negatively affect prices.”

In particular, with Trump facing downward pressure on approval ratings amid elevated inflation in the U.S., some forecasts say that if Republicans lose to Democrats in the November midterm elections, the lame-duck dynamic could accelerate.

As of the day, decentralized prediction market Polymarket showed offshore bettors putting the probability that Democrats will take control of both the House and Senate in the November U.S. midterms at 40%. By contrast, the probability that Republicans will control both chambers stood at a relatively low 17%.

The Wall Street Journal (WSJ) said, “This ruling will have wide-ranging ripple effects,” adding that “it could deal a significant blow to President Trump, who has shored up his political standing through aggressive use of tariffs.” In a recent Washington Post poll, 64% of respondents said they “do not support President Trump’s tariff policy.”