Bitcoin Surges 11% as Trump's Tariff Tone Shifts Sentiment

Crypto investor sentiment has seen a significant recovery from global tariff concerns, with risk appetite returning among investors this week. This shift in sentiment was triggered by a softer tone from US President Donald Trump, who suggested that import tariffs on Chinese goods may “come down substantially.”

However, analysts warn that the market’s structural weaknesses may still result in downside momentum during periods of weekend illiquidity. According to analysts from a major exchange, sentiment improvements reduce fragility but do not eliminate structural risks like thin weekend liquidity. Historically, weekends remain vulnerable to sharp moves, especially when open interest is high and market depth is low. Unexpected macroeconomic news can still increase volatility during low liquidity periods.

Bitcoin (BTC) staged a near 11% recovery during the past week, but its rally has previously been limited by Sunday liquidity dynamics. Bitcoin fell below $75,000 on Sunday, April 6, despite initially decoupling from the US stock market’s drop on April 4 after US Federal Reserve Chair Jerome Powell warned that Trump’s tariffs may affect the economy and raise inflation. The correction was exacerbated by the lack of weekend liquidity and the fact that Bitcoin was the only large liquid asset available for de-risking.

While improved sentiment creates a more stable foundation, cryptocurrency markets are still susceptible to rapid movements during periods of reduced trading volume. The sentiment recovery provides some cushioning, but traders should remain cautious as weekend liquidity constraints can still amplify price movements regardless of the current market mood.

Cryptocurrency markets may have priced in the full extent of tariff-related concerns. It feels like the market has maxed out on tariff-related fear, and many remain uncertain about where things are headed over the next month or so. It also seems like markets were just waiting for the slightest signal that we’re back in the game. Whether the rally is sustainable depends on whether we can break through previous resistance levels, at least in isolation. It could have legs, as markets now seem to believe there’s a ‘Trump put’ under equities, the US dollar and US Treasurys.

The tariff negotiations may only be “posturing” for the US to reach a trade agreement with China, which may be the “big prize” for Trump’s administration. The cryptocurrency market has shown signs of recovery this week, with several major cryptocurrencies experiencing double-digit gains. Bitcoin, the leading cryptocurrency, has surged past $95,000, marking its highest price since February. This rally comes after a period of volatility earlier this month, when Bitcoin traded below $75,000 following announcements from President Trump about his planned "reciprocal" global trade tariffs. The stock market and other "risk-on" assets also took a hit but have since recovered, with Bitcoin leading the way.

The improved sentiment in the crypto market can be attributed to several factors. Lower interest rates, a weakening dollar, and increased liquidity typically encourage investment in higher-risk assets like Bitcoin. Additionally, the narrative of Bitcoin as a store-of-value asset is strengthening, as investors see it as a safe haven during times of economic uncertainty. This has led to a surge in investment in Bitcoin and other major crypto assets, with new Bitcoin ETFs receiving huge amounts of cash from bullish investors.

However, despite the recovery in sentiment, there are still risks to consider. Analysts have taken a cautious stance on the short-term crypto market, indicating that a bottom may not be reached until late in the second quarter. This is due to ongoing liquidity risks, particularly for altcoins, which can experience significant fluctuations in liquidity. Additionally, the weekend is approaching, which historically has been a time of lower liquidity in the crypto market. This could lead to increased volatility and potential price swings.

The Advanced Sentiment Index for Bitcoin has turned bullish, currently standing at 67% despite risks from the US-China trade war. This suggests that there may be further upside potential for Bitcoin in the near term. However, it is important to note that the crypto market is still subject to significant volatility, and investors should be prepared for potential price swings.