The cryptocurrency market experienced a significant downturn today following escalating trade tensions between the U.S. and China. President Trump announced new tariffs on Chinese imports, boosting duties and now totaling 145%, effectively excluding China from a 90-day tariff pause. This development has added fuel to an already tense trade standoff. The market reacted sharply, with Bitcoin dropping 3%, Ethereum plunging 7%, Solana slipping 6%, and XRP falling 4%. Overall, the crypto market cap fell by 4%, wiping out yesterday’s brief recovery.
Why Is this Trade War Impacting Crypto?
Investors view the escalating trade tensions as a threat to global economic stability. The aggressive stance on China — while potentially easing tension with other countries — has increased uncertainty for investors, pushing capital away from high-risk assets like cryptocurrencies. Risk aversion is back in play, and cryptocurrency is once again caught between geopolitical forces impacting the market.
EU-China Trade Talks May Spark a Shift
A surprising development came as China and the European Union announced plans to start talks aimed at removing EU tariffs on Chinese electric vehicles (EVs). This move suggests a possible shift towards diplomacy, even within specific trade agreements involving China and other global partners outside the U.S. While it’s too early to determine if this could impact the broader US-China relationship, any sign of wider trade de-escalation may reignite risk appetite, potentially benefiting crypto prices.
What To Expect if a Trade Deal is Reached
Analysts believe that if negotiations between the U.S. and China reach an agreement or show meaningful progress, crypto markets could see a swift reversal. Cryptocurrencies have historically reacted swiftly to macroeconomic news events. A resolution – or even progress toward one – could lead to: Bitcoin reclaiming over $100K; Ethereum regaining its $2K level; Altcoins bouncing with double-digit gains. However, if uncertainty lingers, cryptocurrency may continue to struggle under pressure from market volatility.