Cryptocurrency markets are experiencing turbulence as President Donald Trump intensifies trade tensions with new tariffs on key trading partners.
Analysts warn that the uncertainty could persist as global markets react to escalating trade disputes.
The White House recently imposed a 25% tariff on imports from Canada and Mexico and a 10% levy on Chinese goods. In response, Canada has implemented retaliatory tariffs on $106 billion worth of U.S. products, with Mexico expected to follow suit.
During a press briefing on Sunday night, Trump reiterated his firm stance on trade, signalling that tariffs on the European Union are imminent. “They don’t take our cars, they don’t take our farm products. They take almost nothing, and we take everything,” Trump said, emphasizing what he views as an unfair trade imbalance with the bloc.
The financial markets have responded sharply to these developments. Analysts at Singapore-based crypto trading firm QCP Capital noted that U.S. Treasury yields bear-flattened, with short-term yields rising. In contrast, long-term yields declined—indicating inflation concerns and fears of an extended trade war. Equities suffered losses, oil prices spiked, and gold fluctuated amid the growing uncertainty.
Cryptocurrency markets were not spared, experiencing significant sell-offs as investors moved to rebalance their portfolios. According to QCP Capital, cross-asset reallocation drives the current market volatility more than issues within the crypto sector alone.
Adding to the turmoil, a widening gap between New York and London gold prices suggests traders may be unwinding carry trades or encountering logistical challenges in moving gold between vaults.
Similarly, Matt Hougan, chief investment officer at Bitwise, highlighted the significance of Trump’s January 23 order in a January 29 communication. He viewed the directive as a pivotal moment for mainstreaming cryptocurrency, facilitating increased participation from banks and Wall Street. Hougan emphasized that the regulatory clarity and the potential establishment of a government-held digital asset stockpile could lead to significant financial inflow into the cryptocurrency market.
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