On Monday, Bitcoin and major stock indices saw a sharp decline after U.S. President Donald Trump imposed new tariffs on imports from China, Mexico, and Canada, leading to widespread market turmoil. However, following the steep sell-off, a recovery effort quickly emerged, with cryptocurrencies rebounding by up to 20% in just 24 hours as traders seized on the market dip. This swift recovery, however, was cut short when China announced retaliatory tariffs on U.S. products, halting the momentum.
As the trading day unfolded in Asia, the situation worsened when the U.S. failed to meet the deadline for additional tariffs on China, intensifying the market’s cautious sentiment. Cryptos like XRP, dogecoin (DOGE), Solana (SOL), and Cardano (ADA) each saw modest increases of around 3%, while Bitcoin (BTC) and ether (ETH) rose approximately 4%.
Ben El-Baz, Managing Director of HashKey Global, expressed concern over the ongoing trade conflict in a message to CoinDesk, stating, “The tariff tensions between the U.S. and China could curb investor interest in risk assets and dampen the bullish trends we’ve seen in crypto markets over the past year.” He further noted, “However, if the U.S. pushes forward with crypto-friendly policies, the damage from tariffs could remain temporary.”
Market sentiment remained divided regarding the impact of China’s retaliatory actions, with some analysts speculating that these tariffs could be a negotiation tactic, akin to the deals made with Mexico and Canada. Others, however, feared this could mark the beginning of a more prolonged trade standoff between the two nations.
Prestro Research’s Min Jung observed, “While Bitcoin is increasingly seen as digital gold, it continues to behave like a risk asset, and the U.S.-China tariff dispute is putting pressure on crypto markets in a similar fashion to traditional equity markets.”
Jung added, “The initial market response may have been an overreaction, but given the uncertainty around the next steps in this trade war, we’re likely to see continued volatility. The key issue is whether this is just a short-term negotiation tactic or the beginning of a sustained trade conflict with China, which has been a central target of Trump’s rhetoric.”
Monday’s dramatic drop provided a “buy-the-dip” opportunity for many traders, as reported by CoinDesk. In response to market volatility, many investors turned to stablecoins pegged to the dollar as a hedge against economic uncertainties. However, the ongoing risk of further retaliatory tariffs and trade escalation remains, which could drive continued volatility in the crypto markets in the days ahead.
