On Friday, China’s Finance Ministry confirmed that it would impose a 34% tariff on all US imports, effective April 10.
The decision is a direct response to Trump’s earlier move to levy a similar 34% tariff on Chinese goods, which was part of a broader push for reciprocal trade agreements.
In its official statement, the Chinese government urged Washington to abandon its “unilateral measures” and engage in respectful dialogue to resolve the dispute.
The announcement sent shockwaves through global markets.
Analysts warn that the ripple effects could reach as far as the crypto market, despite its decentralized nature.
Bitcoin (BTC), which had briefly surged to $84,000, dropped sharply below $82,000 following the news, reflecting broader market anxiety.
The crypto market had already been under pressure after Trump’s tariff announcement earlier this week, and China’s move has only deepened the bearish sentiment.
Crypto market braces for volatility
Despite the initial dip, some analysts believe the cryptocurrency market may not suffer the same depth of losses as traditional financial markets.
According to crypto strategist Kevin Capital, digital assets like Bitcoin and Ethereum are only indirectly affected by tariffs, unlike traditional sectors represented by indices like the S&P 500.
Capital pointed out that current investor sentiment in crypto is being propped up by monetary policy expectations.
With markets now pricing in five potential interest rate cuts from the US Federal Reserve this year, there’s hope that liquidity support could offset macroeconomic shocks like trade tensions.
However, he also warned that optimism could quickly fade if Fed Chair Jerome Powell dismissed the idea of aggressive rate cuts.
“If Powell shuts the door on easing, crypto may eventually mirror the stock market’s steep declines,” Capital noted.
“But if he supports easing, eyes will shift to the CPI data due next week.”
Global markets reel as S&P 500 tumbles
Traditional financial markets have already taken a hit. The S&P 500 lost more than $1.5 trillion in market value as trading opened following China’s announcement.
Futures tied to the Dow Jones Industrial Average and Nasdaq also posted sharp declines, reflecting fears that the global economy may be heading toward a recession.
Meanwhile, European Commission President Ursula von der Leyen signaled that the EU is prepared to take countermeasures if trade talks with the US break down.
This further adds to the uncertainty hanging over the global economy and could increase volatility in both equity and crypto markets in the coming days.
Interestingly, Bitcoin rebounded slightly later in the day on the back of stronger-than-expected US job data, lending support to the theory that crypto markets are currently more sensitive to monetary policy cues than geopolitical tensions.
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