Crypto Markets React to US-China Tariffs

Major Cryptocurrencies Experience Volatility

Crypto majors zoomed as much as 20% before reversing in the past 24 hours as a buy-the-dip strategy following Monday’s $2.2 billion turned profitable for risk-takers, although gains were wiped as China announced retaliatory tariffs on the U.S.

The bump saw a pullback during the Asian morning hours as the deadline for the U.S. to impose additional tariffs on China passed without an agreement.

Crypto Gains Wiped Out

XRP, dogecoin (DOGE), Solana’s SOL, and Cardano’s ADA are up nearly 3%. Bitcoin (BTC) and ether (ETH) are nearly 4% higher.

Experts Weigh In on Market Impact

“The U.S.-China tariff conflict could decrease the appetite for risk assets and further impact the positive sentiment that has been fueling a bull market in the crypto industry over the past year,” Ben El-Baz, Managing Director of HashKey Global, told CoinDesk in a Telegram message.

“The damage from the tariffs could still be made temporary if more crypto-friendly policies in the U.S. are set in motion,” El-Baz added.

Traders Remain Mixed on Long-Term Impact

Traders remain mixed on the long-term impact of China’s retaliatory decisions, however, with markets hinging on the chance of a reversal or a prolonged drawdown if further actions against the country happen under Trump.

Bitcoin’s Volatility

“Despite more people considering Bitcoin as digital gold, it still largely trades like a risk asset,” Min Jung, research analyst at Prestro Research, told CoinDesk in a Telegram chat.

“As a result, China’s retaliatory 10% tariff on the U.S. is pressuring crypto, much like other global risk assets such as equities,” Jung said.

Heightened Volatility Expected

“While today’s initial reaction may have been an overreaction, heightened volatility is likely to persist as markets digest further developments. The key question now is whether this move is primarily a negotiation tactic that could eventually be reversed—similar to what we saw with Canada and Mexico—or if it signals the start of a prolonged trade conflict, given that China has been a central focus of Trump’s rhetoric,” Jung said.

Monday’s Liquidation Event

Donald Trump’s decision to impose tariffs on imports from Canada, Mexico, and China led to a steep drop in bitcoin and broader equity markets on Monday, turning investors’ focus from Trump’s pro-crypto stance to immediate economic repercussions.

Monday’s major liquidation event offered a “buy-the-dip” opportunity to traders, as a CoinDesk analysis noted, with the tariff announcements sparking interest in dollar-backed stablecoins as a hedge against economic uncertainty and currency volatility.

Retaliatory Measures Expected

However, the imposition of tariffs could lead to retaliatory measures from affected countries, potentially sparking a broader trade war and leading to further volatility across the crypto market in the days to come.

Conclusion

The crypto market’s reaction to the US-China tariffs has been marked by volatility, with major cryptocurrencies experiencing significant price swings. While some experts believe the impact will be temporary, others are more cautious, citing the potential for a prolonged trade conflict. As the situation continues to unfold, investors will be closely watching for further developments and potential market reactions.

FAQs

Q: What is the current state of the crypto market?

A: The crypto market is experiencing significant volatility, with major cryptocurrencies experiencing price swings of up to 20% in the past 24 hours.

Q: What is the impact of the US-China tariffs on the crypto market?

A: The tariffs have led to a decrease in appetite for risk assets, including cryptocurrencies, and have sparked concerns about the potential for a prolonged trade conflict.

Q: Will the impact of the tariffs be temporary?

A: Some experts believe the impact will be temporary, while others are more cautious, citing the potential for a prolonged trade conflict.

Q: What is the current state of the US-China trade negotiations?

A: The negotiations are ongoing, with no agreement reached as of yet. The deadline for the U.S. to impose additional tariffs on China has passed without an agreement.