US-China Tariff Cut 24% Boosts Markets

On May 12, the White House announced a 90-day tariff agreement between the US and China, which may set the stage for a broader recovery of stock and cryptocurrency markets. The agreement involves a reduction of tariffs to 10% for an initial 90-day period beginning May 14, marking a 24% cut from current levels. This move is seen as a significant step towards avoiding further economic decoupling between the two nations.

US Treasury Secretary Scott Bessent, speaking at a press conference in Geneva, emphasized the alignment of both governments in preventing economic decoupling. He stated that neither side wants to be decoupled and that the high tariffs imposed were equivalent to an embargo. Both sides are seeking more balanced trade and economic cooperation.

The constructive tone of the negotiations, along with the 90-day suspension of additional tariffs, has removed the risk of sudden re-escalation. This development is expected to benefit altcoins and traditional stock markets, allowing them to follow Bitcoin’s (BTC) price recovery. According to Aurelie Barthere, principal research analyst at a crypto intelligence platform, Bitcoin has already been trading close to its all-time highs and is insulated from tariff-related risks. She expects altcoins, US equities, and the US Dollar Index (DXY) to be well-positioned for a catch-up rally.

Barthere also noted that the US dollar is likely to perform strongly against prior safe-haven currencies such as the euro, Swiss franc, and Japanese yen, reflecting improved global risk sentiment. The analyst previously predicted a 70% chance for crypto and stocks to find their bottom by June, with their price recovery depending on the outcome of trade negotiations.

Bitcoin is currently 4.8% away from recapturing its all-time high of over $109,800 recorded in January 2025. There is potential for risk assets to move beyond the January peak levels if a generous tax cut package materializes. This package would need to go beyond merely extending the expiring tax cuts and include additional income tax reductions as well as corporate tax cuts. According to Barthere, such a package could be unveiled by mid-July, acting as a significant additional catalyst for the markets.

The constructive trade negotiations, paired with emerging technical chart patterns, have spurred analyst calls for a Bitcoin rally to $150,000, depending on the outcome of an emerging bull flag pattern on the weekly chart. This optimistic outlook is supported by the reduction in trade tensions and the potential for further economic stimulus through tax relief.