Trade War Fears Weigh on Bitcoin
Bitcoin and the broader cryptocurrency market faced fresh selling pressure on Tuesday as global trade tensions escalated. After the United States imposed a 10% tariff, China retaliated with an antitrust investigation into Google and new tariffs on coal, crude oil and agricultural equipment.
BTC initially recovered to $100,000 as the US postponed tariffs on Mexico and Canada but quickly fell to $98,000 following China’s retaliatory measures.
Cryptocurrency Volatility Continues
According to a post by QCP Capital X, the cryptocurrency market remains highly volatile and reacts strongly to geopolitical developments. Min Jung, a research analyst at Presto Research, said that although Bitcoin has been compared to 'digital gold', it is highly vulnerable and reacts quickly to geopolitical issues. The initial strong reaction of the cryptocurrency market may be an overcorrection, but prolonged tensions may maintain volatility.
This period of policy changes and tariff wars will be difficult for crypto assets that are facing both internal and external pressures in the United States. Trump’s creation of a sovereign wealth fund along with restrictions on the EU market have caused a lot of controversy and traders are panicking about its long-term impact.
Michaël van de Poppe also noted that this volatility will continue and could impact the soaring crypto market causing it to come to a halt.
A glimmer of hope?
On the downside, there are rumors that the Trump administration is planning to turn the United States into a Bitcoin powerhouse as they prepare for a “big day.”
Meanwhile, Justin d'Anethan of Liquifi pointed out that the US tariffs on Mexico and Canada are just the beginning, with China and possibly Europe becoming the main battleground. Nick Ruck of LVRG Research warned that escalating trade disputes could push crypto asset prices lower unless negotiations lead to a tariff cancellation.
Potential sanctions and regulatory restrictions on tech companies could further increase market confidence, adding downward pressure on riskier assets like Bitcoin. If tensions continue, the market could see more crashes and panic selling could begin.