The cryptocurrency market witnessed intense volatility on Monday, triggered by conflicting reports concerning U.S. tariffs under President Trump’s administration. Bitcoin shot up from $75,000 to over $81,000 before dropping back below $79,000. The marked volatility stemmed mainly from market speculations that the White House may put on hold tariff increases for 90 days.
The confusion stems from statements made by President’s Economic Adviser Kevin Hassett. In an interview, Hassett gave an ambiguous hint about Trump that he might reduce tariffs, pointing to the possibility of some flexibility in negotiations. This statement boosted the confidence of financial markets, sending Bitcoin and other digital currencies to rally sharply.
However, all these gains were short-lived when the White House dismissed these rumors, stating that it had no knowledge of any tariff pause. There was assurance that tariffs would indeed go through as planned on April 9th.
Crypto and traditional markets feel an immediate impact
In the same manner as Bitcoin, other cryptocurrencies also fluctuated substantially. Ripple’s XRP token surged by nearly 10% to $2 before the pump was reversed. Ethereum (ETH), the second-largest of all cryptocurrencies, tumbled gradually down to around $1,545.77, which is 13.7% lower than the results that came immediately after Trump’s first announcement of the tariffs.
Even the traditional markets exhibited similar erratic movements. Following Hassett’s comments, the S&P 500 rose 6% before quickly erasing its gain on the rejection of the White House tariff pause rumor. Collectively, Wall Street has declined by more than 11% since last Wednesday, which captures the worries of investors across the world.
Crypto-related equities also suffered considerably. Coinbase Global Inc.(COIN) fell by as much as 4%, and MicroStrategy (MSTR), which holds a significant amount of Bitcoin, sank by 11%. Bitcoin mining stocks were hit even harder and dropped more than 10%, while hashprice, arguably key to mining profitability, declined to around $42.40.
Escalating trade war raises long-term market risks
These market reactions suggest that investors are increasingly concerned about trade relations between the US and China. President Trump previously announced aggressive tariff measures, setting a 10% tariff across the board and higher tariffs selectively on China. In return, China levied a 34% tariff on imported US products, which recently made Trump threaten to apply tariffs of 104%.
The People’s Daily pointed out that China had sufficient measures to respond to the tariff aggression and was fully prepared to confront the “US tariff bullying.” This commentary indicated that similar tensions had been addressed after years of experiencing pressure from Washington.
Trump further asserted that there would be no deal with China unless the country sorts out the trade deficit problem in America. He added that the EU and Japan may experience more tariffs if they do not find a resolution to address the bilateral trade deficit.
Trump’s tariff threats have already proven costly for cryptocurrency markets. Since the announcement was made last Wednesday, Bitcoin has been down by about 5.5% or $4,553. However, Ethereum saw a much sharper decline, which suggests that even more investors are being risk-averse in the altcoin space. Ripple has also been down by about 7.7% during the same duration, reflecting the general market sentiments. With tariffs starting tomorrow, April 9, analysts expect more volatility to happen.
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