Bitcoin saw a strong jump Thursday morning after US President Donald Trump announced the easing of some tariffs. This came as part of his decision to postpone the imposition of additional tariffs on some major countries for 90 days. This decision helped improve market sentiment and boost investor risk appetite. However, China was not granted any exemptions; instead, the US raised tariffs to 120%. Beijing immediately responded with retaliatory tariffs of 84% on US goods. Despite these tensions, Bitcoin’s price rose 7% to $82,146. This is the highest price in weeks, but it is still below its peak five months ago.
Trade War Casts a Pause on Markets
Tensions between China and the US have contributed to a cloudy environment in financial markets. Businesses fear disruptions to supply chains and higher manufacturing and import costs. In this context, Bitcoin’s limited gains are a testament to the prevailing caution in the market. On the other hand, Trump has shown no clear intention of backing down from his tariff approach. This has raised some hopes for a possible trade agreement in the near future. However, doubts remain about his true intentions and the long-term impact of his decisions.
Impact of Tariffs on Cryptocurrencies
Cryptocurrencies are high-risk assets and are often affected by global market shifts. With Trump’s announcement of a temporary easing of tariffs, financial markets and cryptocurrencies generally rebounded. However, Bitcoin’s response was less favorable than that of traditional markets such as stocks and currencies. This limited response is partly due to the announcement of heavy losses by Strategy Analytics, the largest holder of Bitcoin. The company recorded a sharp decline in the value of its digital assets in recent weeks. This announcement has negatively impacted investor confidence in the cryptocurrency market.
The rise of altcoins increases investor optimism.
The rally wasn’t limited to Bitcoin alone, but also included a number of altcoins. Dogecoin’s value rose by 10% after 21Shares announced it had applied for an exchange-traded fund (ETF). This fund is expected to attract significant institutional investment in the popular currency. Meanwhile, Ethereum jumped 11.1% to $1,621.92. Ripple also rose to $2.0164, registering a gain of around 12%. Solana, Cardano, and Polygon also saw gains ranging between 7% and 11%. The Trump coin also added 7% to its value, benefiting from the political turmoil.
Cryptocurrencies’ Correlation with Traditional Markets
Cryptocurrencies typically align with markets driven by risk appetite. When markets become more optimistic, investments in digital and alternative assets increase. With Trump’s announcement of the tariff extension, momentum has noticeably returned to the crypto market. However, caution remained in place due to the complexities of the global political and trade landscape.
Risks Remain Despite Temporary Recovery
Bitcoin’s current rally cannot be considered a turning point for the market. Concerns still surround the repercussions of the trade escalation between Washington and Beijing. Any negative development could quickly send markets back to lower levels. Furthermore, cryptocurrencies experience significant volatility due to the lack of clear regulation. Any statement or rumor could lead to sharp price fluctuations in a short period of time. Therefore, many investors prefer to wait until the situation becomes clearer.
Uncertain Path Despite the Rise
Bitcoin’s recent surge reflects the extent to which the digital economy is intertwined with geopolitical decisions. Any change in global policies directly impacts the performance of cryptocurrencies. However, gains remain limited unless broader political and economic conditions improve. Investors should be cautious about making hasty decisions based on temporary moves. It is best to closely monitor and analyze developments in the trade war before entering the market.
Bitcoin faces market volatility.
Bitcoin is known for being a highly volatile currency, affected by even the slightest shifts in market sentiment. When risk appetite increases, liquidity flows into digital assets, temporarily boosting Bitcoin’s performance. However, when political or economic tensions escalate, confidence declines, and investors begin selling their cryptocurrency holdings. In this context, Bitcoin does not operate in isolation from global events, but rather reacts directly and rapidly to them. Every statement by world leaders or action by central banks can lead to significant price fluctuations.
However, Bitcoin demonstrates a remarkable ability to recover from severe shocks. It often recovers a portion of its losses within relatively short periods, compared to some traditional assets. While this is appealing to some investors, it adds an additional dimension of risk.
On the other hand, digital markets lack stable regulatory frameworks, which increases their volatility.
Decisions such as trading bans or taxation of cryptocurrencies immediately impact price movement. Furthermore, Bitcoin’s movements depend on technology-related news, such as exchange hacks or network updates. Any technical glitch or rumor could cause a sudden collapse in market value.
With all these challenges, Bitcoin is sometimes viewed as a hedge against inflation or financial crises. However, this role remains controversial, as historical data has not always supported this perception. In this context, investing in Bitcoin requires a deep awareness of risks and opportunities, as well as long-term planning. Therefore, it is advisable not to rely on it alone as a primary source of returns, but rather to use it within a diversified portfolio. Bitcoin will remain a symbol of volatile and changing markets and an indicator of existing economic tensions. Its role will continue to be linked to the stability of global markets and investor confidence in the digital financial system.
