Bitcoin Drops 3% on China's 34% Tariff Retaliation

China’s 34% tariff retaliation has intensified global trade tensions, impacting Bitcoin and global markets. The U.S. announced sweeping reciprocal tariffs on April 2nd, to which China responded with a 34% tariff on all U.S. imports, effective April 10th. This escalation has raised concerns across multiple markets, including the crypto space.

Bitcoin, which had briefly climbed to $84,000, quickly slipped below $82,000 following China’s announcement. With the European Union also signaling readiness to introduce countermeasures, market volatility could deepen, especially in the digital asset space. However, analysts remain optimistic about Bitcoin's resilience amidst the turmoil. Eric Weiss noted that as the tariff war escalates and stocks bleed, Wall Street will eventually realize there’s an alternative: Bitcoin. No earnings risk. No geopolitics. Just math. The moment capital truly pivots, BTC doesn’t just hold up, it outperforms dramatically.

The announcement also delivered a blow to the U.S. dollar, with the Dollar Index sliding 2%, a sign of shaken investor confidence. In response, China swiftly called on the U.S. to withdraw its tariffs and warned of countermeasures to protect its national interests. Despite the escalating trade tensions, analysts suggest the crypto market may remain more resilient than traditional equities. While sectors tied to the S&P 500 suffer directly from tariffs, crypto appears buffered by macroeconomic sentiment, particularly around interest rate expectations. With Fed funds futures now projecting five rate cuts, optimism lingers that monetary policy could provide a cushion for digital assets. However, this optimism is fragile—should Fed Chair Jerome Powell dismiss the possibility of easing, crypto could quickly follow equities into a deeper slump.

For now, with Bitcoin rebounding on strong U.S. job data, the market’s focus remains fixed on upcoming CPI figures and Powell’s stance, which could dictate crypto’s near-term trajectory. The recent trade tensions have led to significant market sell-offs, with Bitcoin initially reflecting worldwide market anxiety by dropping almost 3%, falling under $82,000. However, Bitcoin has since steadied above $80,000, defying the market volatility and equity sell-offs triggered by the trade war. This resilience is attributed to surging whale demand, indicating a strong institutional interest in Bitcoin as a strategic asset to buy and hold long-term. The trade war-fueled market sell-off has dampened hopes for an IPO bonanza, further highlighting the appeal of Bitcoin as a safe haven asset. As the trade war continues to unfold, Bitcoin's role as a potential refuge for investors seeking to hedge against market volatility remains a topic of keen interest.