In the past 24 hours, major cryptocurrencies saw significant gains, with some rising as much as 20%. This surge was driven by a buy-the-dip strategy after a $2.2 billion market shift on Monday. However, these gains quickly reversed when China announced retaliatory tariffs on the U.S.
During the Asian morning hours, the market pulled back as the deadline for new U.S. tariffs on China passed without a resolution. Cryptocurrencies like XRP, Dogecoin (DOGE), Solana (SOL), and Cardano (ADA) increased by nearly 3%. Bitcoin (BTC) and Ether (ETH) rose nearly 4%.
Ben El-Baz, Managing Director of HashKey Global, expressed concerns about the U.S.-China tariff conflict. He noted that it could reduce interest in risk assets, impacting the positive sentiment that has driven the crypto market’s growth over the past year. However, he mentioned that if the U.S. implements more crypto-friendly policies, the negative effects might be temporary.
Traders are uncertain about the long-term effects of China’s tariffs. The market could either see a reversal or a prolonged downturn if further actions are taken against China under Trump’s administration. Min Jung, a research analyst at Prestro Research, pointed out that while Bitcoin is increasingly viewed as digital gold, it still behaves like a risk asset. The tariffs are putting pressure on cryptocurrencies, similar to other risk assets like stocks.
The initial market reaction may have been an overreaction, but volatility is expected to continue as developments unfold. The key question is whether these tariffs are a negotiation tactic or the start of a longer trade conflict, especially given Trump’s focus on China.
Trump’s tariffs on imports from Canada, Mexico, and China caused a sharp decline in Bitcoin and stock markets on Monday. This shift redirected investor attention from Trump’s pro-crypto stance to immediate economic impacts.
The recent market events provided a “buy-the-dip” opportunity, with traders turning to dollar-backed stablecoins as a safeguard against economic uncertainty. However, retaliatory measures from affected countries could lead to a broader trade war, increasing volatility in the crypto market.
