Bitcoin Drops 3% to $101,300 After US-China Trade Truce

Bitcoin (BTC) experienced a significant decline, falling below $102,000, following the announcement of a temporary truce in the trade war between the U.S. and China. This move marks a shift in the cryptocurrency's trajectory, which had been on an upward trend since early April when it bottomed just under $75,000. The price surge was initially sparked by President Trump's tariff announcements and further fueled by agreements with other countries, including the UK. The cryptocurrency nearly reached $106,000 after the two economic giants agreed to suspend most tariffs on each other’s goods for 90 days.

At the time of reporting, bitcoin had retreated to $101,300, reflecting a 3% decrease over the past 24 hours. This pullback contrasts with the performance of U.S. stock markets, which surged with the Nasdaq rising by 3.9% and the S&P 500 by 3.1%. The divergence in performance can be attributed to bitcoin's significant rally from its April low, which exceeded that of major U.S. averages. Given that bitcoin was the more extended asset, its relative underperformance today is more understandable.

Analysts have noted that bitcoin's outperformance was largely due to its insulation from tariff-related risks. With the latest announcements, there is an expectation that other assets, such as altcoins, U.S. equities, and the U.S. dollar, which underperformed sharply in the first quarter, may begin to catch up as the broader risk environment improves. Despite the recent pullback, the 90-day tariff pause is seen as a positive signal for risk assets, including cryptocurrencies. Lower tariffs are expected to ease inflationary pressures and improve global liquidity conditions, both of which are typically bullish for BTC and other cryptocurrencies. However, it is important to note that this arrangement is temporary, and volatility is likely to return as the 90-day window approaches its end.