Trade War Turmoil: Bitcoin Plunges 12% as U.S.-China Tensions Escalate

Crypto Market Turmoil: U.S.-China Trade War Triggers Wild Price Swings

The U.S.-China trade war has sent shockwaves through the crypto market, with Bitcoin and other digital assets experiencing wild price swings. The escalating tensions between the world's two largest economies have led to a surge in volatility, as investors grapple with the potential economic fallout.

On February 3, President Donald Trump announced new tariffs on imports from Canada, Mexico, and China, sending global markets into a tailspin. The news triggered a sharp sell-off in Bitcoin, which dropped from nearly $105,000 to $92,000, a decline of more than 12%. Other cryptocurrencies, such as Ethereum and XRP, also suffered significant losses.

The following day, China retaliated with its own tariffs on U.S. goods, further exacerbating the market turmoil. The Chinese finance ministry announced a 10% tariff on all U.S. imports, effective as of 12:01 AM ET. The tariffs target sectors such as energy and agriculture, with 15% duties on coal, LNG, and 10% tariffs on crude oil and select automobiles. These measures will go into effect on February 10. China also introduced export controls on critical minerals like tungsten and ruthenium, citing national security concerns.

The U.S.-China trade war has been ongoing for several years, with both nations imposing tariffs on each other's goods in an effort to gain a competitive advantage. The latest round of tariffs has raised concerns about the potential impact on global economic growth and inflation. As a result, investors have been fleeing riskier assets, such as cryptocurrencies, in favor of safer havens like gold and the U.S. dollar.

Analysts have warned that the crypto market's recent volatility is likely to continue in the near term, as investors remain on edge about the potential economic fallout from the U.S.-China trade war. Michael Van de Poppe, an acclaimed crypto market expert, opined that volatility would continue in the Bitcoin market. Meanwhile, experienced cryptocurrency traders, like Phoenix, stated that Bitcoin would form a new short-term range due to the current volatile market condition. Onchain analyst Axel Adler Jr. noted that Bitcoin's funding rates turned negative, a bullish signal.