Cryptocurrencies Plunge as US Hikes China Tariffs to 104%

Bitcoin and Ethereum, along with most other altcoins, experienced a significant decline following the announcement of an unprecedented tariff hike by the United States on Chinese goods. The White House confirmed on Tuesday, April 8, that the tariff on all goods from China would increase to 104%, effective from 12:01 AM on April 9, Eastern Time.

This announcement led to a sharp drop in the prices of major cryptocurrencies. Bitcoin (BTC) fell to a daily low of $76,508, while Ethereum (ETH) bottomed out at $1,454. The decline was attributed to fears of the negative economic impact that these unprecedented tariffs could have on the global economy.

The decision by the White House came after China failed to respond to President Trump's ultimatum. Trump had threatened an additional 50% tariff hike if China did not revoke its 34% retaliatory tariffs on U.S. goods by April 8.

Several analysts have provided their insights on the potential effects of the U.S.-China trade war on cryptocurrency markets. Nansen’s analyst Aurelie Barthere described the escalation as a “worst case scenario” for risk assets, including cryptocurrencies. According to Barthere, escalating tariffs would negatively impact economic growth globally, leading to a “global growth shock.” This scenario would be particularly detrimental to risk assets, which rely heavily on economic growth to support their inflated valuations.

However, not all analysts share this pessimistic view. BitMEX co-founder Arthur Hayes suggested that the escalating trade war with China could actually benefit Bitcoin. Hayes predicted that the trade war would likely impose inflationary pressures on the yuan, prompting Chinese investors to seek Bitcoin as a safe haven. This scenario has occurred previously and has boosted Bitcoin’s price.

As of now, it is unclear what direction the White House will take regarding tariffs in the future. The market's reaction to the tariffs underscores the sensitivity of cryptocurrencies to geopolitical events and economic policies. The drop in Bitcoin and Ethereum prices reflects investor concerns about the potential economic fallout from the trade dispute. The situation remains fluid, with the potential for further volatility in the cryptocurrency market as the trade dispute continues to unfold.