The European Stability Mechanism (ESM) has raised concerns that the United States’ growing support for dollar-backed stablecoins could threaten Europe’s financial stability and monetary sovereignty.

These concerns come as stablecoin regulation gains traction in the US. US national banks and federal savings associations can offer services without prior regulatory approval.

EU Warns US Stablecoins Could Threaten Euro Stability

Pierre Gramegna emphasized the urgency of the European Central Bank’s (ECB) digital euro initiative as a countermeasure. As the Managing Director of the ESM, Gramegna urged expedition to preserve the country’s monetary sovereignty and financial stability.

“It could eventually reignite foreign and US tech giant’s plans to launch mass payment solutions based on dollar-denominated stablecoins. And, if this were to be successful, it could affect the euro area’s monetary sovereignty and financial stability,” Gramegna stated at a Eurogroup meeting.

The EU is advancing its digital euro project to safeguard its financial independence. The ECB has long warned that reliance on US-backed stablecoins could weaken the euro.

He echoes recent remarks by ECB official Piero Cipollone during an early February interview. Then, Cipollone indicated that the Trump administration’s support for stablecoins would likely accelerate legislation surrounding the digital euro. Such an outcome, he said, would position it as a necessary alternative.

“The US and Europe have differing views on stablecoins. The Trump administration sees them as a tool to strengthen the US dollar’s global presence, whereas the ECB fears they could destabilize Europe’s financial system,” Cipollone explained.

The ESM supports the ECB’s digital euro project and the European Commission’s efforts to revise the MiCA (Markets in Crypto-Assets) directive. Gramegna emphasized that these measures are critical in preventing a scenario in which European consumers and businesses become overly reliant on US-backed stablecoins.

Indeed, these concerns come as the United States government has increasingly favored crypto, particularly stablecoins pegged to the US dollar. Federal Reserve Governor Christopher Waller recently asserted that stablecoins could enhance the US dollar’s global role.

Federal Reserve Chair Jerome Powell has also advocated for stablecoin regulation to solidify their role in financial markets. Meanwhile, new rules now permit US banks to offer stablecoin services, signaling further integration of stablecoins into traditional finance (TradFi).

These developments could accelerate the dominance of US-backed stablecoins in global transactions. Reports suggest that even Bank of America (BoA) is exploring launching its own stablecoin, while Circle CEO Jeremy Allaire is pushing for mandatory US registration of stablecoin issuers.

The debate over stablecoins mirrors broader geopolitical concerns. The dollar’s dominance in digital payments could grow as US financial institutions integrate stablecoins into their services. This could limit the euro’s influence.

European policymakers advocate for a strong regulatory framework and an accelerated timeline for the digital euro’s rollout to counter this.

Trump announces new tariffs against Canada, striking a tough posture against its northern neighbor’s defiant attitude. Trump reiterated his call that the US annex Canada outright, thereby ending its independence.

Like previous announcements, this threat could be explosive for the crypto markets, but the tariffs may be priced in or not take effect. The more pertinent question is whether the US is about to enter a recession.

Trump Gets Tough on Canada Tariffs

President Trump’s planned tariffs have been wreaking havoc on the crypto market, and it looks like they aren’t done yet. At the beginning of February, Canada and Mexico managed to postpone them, significantly helping the crypto market. However, Trump is following through and is placing a new tariff on Canada:

“Based on Ontario, Canada, placing a 25% Tariff on ‘Electricity’ coming into the United States, I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, to 50%, on all Steel and Aluminum coming into the US from Canada. This will go into effect tomorrow morning, March 12,” Trump claimed on social media.

Trump slightly edited the announcement after first posting it, clarifying that tariffs on Canada have a clear deadline. Trump also pointed to several other priorities in US-Canada relations: dairy sales, automobile manufacturing, military spending, and more. He finished with another call that the US should annex Canada outright.

This last demand, a complete end to Canada’s national autonomy, has been a particular sticking point in the tariff saga. After the US passed tariffs against China, the nation retaliated with a few tariffs of its own.

Canada also retaliated, and this tough posture created a fresh wave of support for its ruling party.

This popularity surge is especially important. It prompted harsher rhetoric on Canada’s part, and Trump has responded in kind. With his new offensive, the situation is escalating. It seems difficult to identify a clear off-ramp for both parties.

What does all of this mean for the crypto market? These tariffs have spelled a consistent bearish outcome for the industry, with markets declining alongside fresh announcements.

Additionally, crypto liquidations are already high, and Bitcoin’s price is not doing well. New tariffs against Canada could have a severe impact.

However, the market was already falling before Trump announced the new tariffs against Canada. The broader macroeconomic outlook is looking pretty bearish, and these tariffs may not change much on their own.

The crypto community will need to closely follow this situation when/if the tariffs go live tomorrow, and their effects will be more legible then.

Ultimately, “if” is the operant word there. Since Trump already balked from implementing tariffs against Canada and Mexico before, he may blink again.

However, that situation is creating a lot of market uncertainty, which could be much more dangerous than any tariff. If the market loses its confidence, that will definitely affect the crypto market.

The most important question is whether a full-blown recession will happen soon. These tariffs against Canada may or may not actually occur, and if they do, Trump may roll them back within 24 hours.

At this chaotic moment, it’s difficult to say whether any single policy could change everything.

Bitcoin price started a fresh decline below the $86,000 zone. BTC is now correcting losses and might struggle near the $84,000 and $85,000 levels.

• Bitcoin started a fresh decline below the $85,000 zone.
• The price is trading below $84,000 and the 100 hourly Simple moving average.
• There was a break above a key bearish trend line with resistance at $82,000 on the hourly chart of the BTC/USD pair (data feed from Kraken).
• The pair could start another decline if it fails to clear the $84,000 resistance zone.

Bitcoin Price Faces Resistance

Bitcoin price started a fresh decline below the $85,000 level. BTC traded below the $82,000 and $80,000 support levels. Finally, the price tested the $76,500 support zone.

A low was formed at $76,818 and the price recently started a recovery wave. There was a move above the $78,000 and $80,000 resistance levels. The bulls pushed the price above the 23.6% Fib retracement level of the downward move from the $91,060 swing high to the $76,818 low.

There was a break above a key bearish trend line with resistance at $82,000 on the hourly chart of the BTC/USD pair. Bitcoin price is now trading below $84,000 and the 100 hourly Simple moving average. On the upside, immediate resistance is near the $83,200 level. The first key resistance is near the $84,000 level.

The 50% Fib retracement level of the downward move from the $91,060 swing high to the $76,818 low is also near $84,000. The next key resistance could be $85,000.

A close above the $85,000 resistance might send the price further higher. In the stated case, the price could rise and test the $86,500 resistance level. Any more gains might send the price toward the $88,000 level or even $96,200.

Another Drop In BTC?

If Bitcoin fails to rise above the $84,000 resistance zone, it could start a fresh decline. Immediate support on the downside is near the $81,200 level. The first major support is near the $80,000 level.

The next support is now near the $78,000 zone. Any more losses might send the price toward the $76,500 support in the near term. The main support sits at $75,000.

Technical indicators:

Hourly MACD – The MACD is now losing pace in the bullish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now above the 50 level.

Major Support Levels – $81,000, followed by $80,000.

Major Resistance Levels – $84,000 and $85,000.