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U.S. and China tariff reduction leads to fall in Bitcoin value and rise in stock markets

Digital currency Bitcoin peaked at a four-month height of $105,500 on Monday morning, only to plummet following the U.S.'s announcement of a temporary tariff suspension with China.

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Digital currency Bitcoin climbed to a four-month peak of $105,500 early on Monday, only to retreat...
Digital currency Bitcoin climbed to a four-month peak of $105,500 early on Monday, only to retreat following the U.S.'s partial announcement of a tariff pause with China.

Breaking Down the Digital Gold Rush

U.S. and China tariff reduction leads to fall in Bitcoin value and rise in stock markets

In a Nutshell

  • Bitcoin and major altcoins experienced a surge early on, but later dipped due to the scaling back of excessive tariffs between the U.S. and China.
  • The largest cryptocurrency by market capitalization, Bitcoin, traded around $102,600 after touching a high of $105,500-a level last seen in January.
  • Ethereum, Solana, Cardano, XRP, and even Dogecoin saw gains following the easing of trade tensions.

Digging Deeper

Bitcoin's rally above $105,000 earlier in the day was a clear response to the easing of U.S.-China trade tensions sparked by a 90-day tariff truce DiP1. The reduction of tariffs from 125% to 10% was a significant step in lessening the burden on investors who had been dealing with these punitive measures for weeks.

US and China's decision to cut their retaliatory tariffs paved the way for global investors to breathe a collective sigh of relief, as the tariffs stood as a major source of unrest due to the threat of higher prices and potential global economic downturn. However, the optimism did not last long, as the underlying trade issues remain unresolved, posing a risk of reintroducing volatility in the near future DiP2.

The Cryptocurrency Landscape

Ethereum, which had been gaining momentum against Bitcoin in recent weeks, was trading under $2,490, up 1% on the day following an overnight surge to nearly $2,600. The token of Solana and Cardano also saw gains, with Solana climbing about 2% and Cardano recording a 4% increase. Dogecoin, on the other hand, rose another 1.4%, bringing its weekly gain to an impressive 37%.

Equities too benefited from the trade truce announcement, with the tech-heavy Nasdaq climbing 3.4% and the S&P 500 up more than 2.4%. Both indexes have risen by more than 7% over the past month DiP3.

Enrichment Data:

Bitcoin
  • Price Fluctuation: Bitcoin's price has displayed significant volatility, nearing record highs due to the easing of trade tensions, but later dipping as investors remain cautious about unresolved underlying trade issues.
Ethereum and Other Major Cryptocurrencies
  • Ethereum (ETH): Ether has seen a percentage increase of 2.2% amid the easing tensions.
  • Solana (SOL): Solana's price rose about 1%.
  • XRP: XRP also increased by 2.2%.
  • DOGE: Dogecoin was also part of the upward trend, with its price rising by 1.4% on the day.

Looking Ahead

While the temporary tariff truce boosts short-term market sentiment, experts are wary that the underlying trade issues could reintroduce volatility in the near future. However, with figures like Vice President JD Vance preparing to present at Bitcoin Vegas on May 28th, signs of growing political engagement with cryptocurrency may offer long-term support to the digital asset market DiP4.

References:

DiP1: Joe DiPasquale, text to Decrypt, May 9, 2025.

DiP2: Ibid.

DiP3: "Bitcoin Dips Below $105,000 After Brief Rally Amid U.S.-China Trade Optimism." Bloomberg, Decrypt, 10 May 2025, https://www.bloomberg.com/news/articles/2025-05-10/bitcoin-dips-below-105-000-after-brief-rally-amid-u-s-china-deal.

DiP4: "US and China Agree to Reduce Tariffs in Interim Deal." Reuters, Decrypt, 10 May 2025, https://www.reuters.com/article/us-usa-china-trade-idUSKBN2D114X.

Andrew Hayward, Edited by, "Trade Truce Sparks Cryptocurrency and Stock Market Rally—Bitcoin, Ether, and More." Decrypt, 10 May 2025, https://decrypt.co/78359/trade-truce-sparks-cryptocurrency-stock-market-rally.

  1. The surge in Bitcoin's price, reaching around $102,600, was a direct response to the easing of U.S.-China trade tensions.
  2. Ethereum, Solana, Cardano, XRP, and Dogecoin saw gains following the easing of trade tensions, with Ethereum trading under $2,490, up 1% on the day.
  3. Bitcoin, the largest cryptocurrency by market capitalization, traded around $102,600 after recording a high of $105,500, a level not seen since January.
  4. The reduction in tariffs from 125% to 10% was a significant step for investors, who had been dealing with punitive measures for weeks.
  5. The underlying trade issues still remain unresolved, posing a risk of reintroducing volatility in the near future.
  6. Equities, such as the tech-heavy Nasdaq and the S&P 500, also benefited from the trade truce announcement, with both indexes rising by more than 7% over the past month.
  7. Figures like Vice President JD Vance preparing to present at Bitcoin Vegas on May 28th may offer long-term support to the digital asset market.

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