Tariffs Temporarily Lifted: Crypto Market Rebounds

Generated by AI AgentCoin World
Tuesday, Feb 4, 2025 1:33 am ET1min read
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Tariffs ease, sparking crypto market rebound—Bitcoin and Ethereum regain lost ground

After a brutal sell-off triggered by U.S. President Donald Trump's tariff announcement on Feb. 1, the crypto market has staged a strong rebound. Bitcoin (BTC) and Ethereum (ETH), along with the broader digital asset market, saw heavy losses following the U.S. move to impose tariffs on Canada, Mexico, and China. However, a temporary pause on trade restrictions for Canada and Mexico has since sparked renewed optimism.

BTC, which plunged to a low of $91,200 on Feb. 3 following Trump's tariff declaration, has recovered sharply, trading around $101,000 as of Feb. 4—a 7% gain in the last 24 hours, though still down nearly 2% on a weekly basis. ETH, which suffered an even deeper plunge to $2,460, has bounced back more aggressively, rising nearly 10% in the last 24 hours to $2,800, though it remains 12% lower than a week ago.

The broader crypto market has followed suit, with total market capitalization surging 8.5% in the past day to reach $3.43 trillion, according to CoinGecko. Investor sentiment has also turned positive, as the Crypto Fear & Greed Index has climbed back to 72—indicating a shift into "greed"—after hitting a fear-driven low of 44 during the crash.

The sell-off began on Feb. 3, when Trump's order introduced new tariffs, sending shockwaves across financial markets, including crypto. China was hit with a 10% tariff, while Canada and Mexico faced steeper 25% duties. The move triggered immediate uncertainty, causing risk assets—including cryptocurrencies—to tumble. However, within hours, diplomatic efforts were already in motion.

Canadian Prime Minister Justin Trudeau announced on X that he had spoken with Trump and secured a temporary 30-day pause on the tariffs while both countries worked on a broader border security agreement. The deal includes a $1.3 billion security plan, appointing a Fentanyl czar, and reinforcing the U.S.-Canada border. Mexico followed a similar path, with President Claudia She