Bitcoin Drops 1.5% After U.S.-China Tariff Truce

Bitcoin experienced a dip in recent hours after reaching $105,500, its highest price since January. This decline came after the U.S. and China announced a significant reduction in their tariffs on each other, a move that has been anticipated by investors for weeks. The largest cryptocurrency by market capitalization was recently trading at about $102,600, down 1.5% over the past 24 hours. Bitcoin briefly rose above $105,500 before U.S. markets opened, but then retreated.

The easing of U.S.-China trade tensions appears to have directly influenced Bitcoin's rally above $105,000. The announcement of a 90-day tariff truce has injected optimism into global markets, enhancing the appeal of decentralized assets like Bitcoin, which are often viewed as hedges against geopolitical uncertainty. However, it is important to note that this truce is temporary, and the underlying trade issues remain unresolved, which could reintroduce volatility in the near future.

Following weekend talks, the U.S. and China agreed to cut their retaliatory tariffs on one another from 125% to 10% for 90 days, while they continue to discuss the ongoing trade war. These penalties have been weighing heavily on investors for weeks amid fears that they would raise prices and trigger a global recession. However, risk-on assets have risen over the past three weeks amid hopeful signs that the U.S. would ratchet back its trade war—not only against China, but other major partners.

Ethereum, which has been outpacing Bitcoin over the past month, was changing hands under $2,490, up 1% on the day following an overnight surge to nearly $2,600. ETH has soared about 51% from a month ago. The tokens of Solana and Cardano are both up on the day, about 2% and 4% respectively, while Dogecoin rose another 1.4% on the day to push its weekly gain to a massive 37%.

Equities spiked on Monday's news, with the tech-heavy Nasdaq climbing and the S&P 500 up more than 2.4%. Both indexes have risen over the past month, with most of those gains occurring since late April. Bitcoin has jumped roughly 21% over the past month, with some analysts saying that it has appeared to behave more like a safe-haven asset of late.