Quick Takes
- Bitcoin’s price dropped below $100,000 after China announced fresh new tariffs on U.S. imports in reaction to Trump imposing a 10% tariff on all Chinese goods sold in the States.
- The crypto market was only starting to recover from the aftermath of the $2.2 billion liquidation rout last week triggered by Trump announcing a 25% tariff on Mexico and Canada. Investors feared the policy would dampen economic growth and heighten inflation, forcing many to sell risk assets such as crypto and stocks.
- China has levied an additional 15% on coal and LPG, and a 10% tariff on crude oil, agricultural machinery, and vehicle imports from the U.S.. Beijing is also tightening exports of rare earth minerals, such as tungsten, citing national security interests.
- Despite dropping to a three-week low, Bitcoin’s loss is way lesser compared to Ether (ETH), which saw its price decline by nearly 25% in three days. Experts are forecasting the volatility to remain until the U.S. negotiates a deal with its trading partners.
The revival of the cryptocurrency market following Trump’s pausing of tariffs on imports from Canada and Mexico was short-lived after China announced retaliatory measures against the United States. The market is still reeling from the global rout that saw over $2.2 billion liquidated by investors due to fears over sanctions by the U.S., believing it could hurt economic growth and earnings, as well as cause inflation to rise.
China Retaliates With 10-15% Tariff On U.S. Imports, Bitcoin Dips To $98,000
Early on Tuesday, China’s finance ministry announced a fresh set of tariffs to take effect on February 10, that will impose a 15% levy on coal and liquified natural gas, and an additional 10% tariff on crude oil, agricultural equipment, and vehicles imported from America.
Beijing’s response comes after the Trump administration imposed additional tariffs on Chinese goods and services took effect on February 4. In a translated statement, the ministry said the U.S.’ “unilateral imposition” of tariffs severely violated the rules of the World Trade Organization.
Furthermore, China’s Ministry of Commerce announced that it will be tightening export controls on products containing rare earth minerals such as tungsten, tellurium, bismuth, molybdenum, and indium, citing the need to safeguard national interests and security.
According to a report from Bloomberg, the Chinese state administration for market regulation has also launched an antitrust investigation into Google just moments after the U.S. tariffs took effect.
Major cryptocurrencies have already taken a hit, with Bitcoin (BTC) dropping to around $98,500 at one stage today after a sharp rebound to above $100,000 from the yearly low of $92,000 on Monday amid a broader sell-off triggered by President Trump’s tariff threats.
The top 10 cryptocurrencies reacted negatively to China’s reaction, with Dogecoin (DOGE) leading losses at 5.8%, followed by Ripple (XRP) suffering a 5.1% decline.
Analysts Say U.S. Tariff-Related Headlines Will Drive Crypto Market Sentiment
Speaking to The Block, Min Jung, a research analyst at Presto Research, commented that while Bitcoin is often seen as a digital alternative to gold, it continues to be perceived as a risk asset by many investors, and China’s retaliatory 10% tariff on the U.S. is likely to pile more pressure on risk assets like crypto and equities.
However, he noted that the V-shaped recovery seen on Bitcoin’s price chart before Beijing’s announcement is indicative of the market simply overreacting to the news and the longer-term impact of the policy decision will depend on whether this marks the beginning of a border trade escalation or remains a one-off event. Jung highlighted that experts expect the volatility to remain high as tariff-related headlines continue to drive market sentiment.
Justin d’Anethan of Liquifi said that while the initial market turbulence was tied to Trump’s tariffs on Mexico and Canada, it is becoming clear that those were just the “opening shots” and the real escalation is happening with China, followed by Europe.
Nick Ruck, director of LVRG Research, said the trade war will further deepen a sell-off of crypto assets unless the U.S. negotiates a deal with China similar to Canada and Mexico.
On Monday, Bitcoin slid to a three-week low of $91,441, but it was less severe compared to Ether (ETH), which has lost nearly 25% of its value since Friday. This was Ether’s biggest three-day losing streak since November 2022, in the aftermath of the FTX exchange collapse.
Analysts say that Bitcoin’s loss during the market turbulence was slower compared to the rest of the crypto market because most buyers consider it as a “risk-off” asset like gold and also due to it being easier to sell during a period of stress.
Trump Signs EO To Establish U.S. Sovereign Wealth Fund That Could Potential Invest In Bitcoin
Meanwhile, earlier today, President Trump signed an executive order directing the U.S. Treasury and Commerce departments to begin the procedure to establish a sovereign wealth fund within the next 12 months.
The departments have been ordered to submit a plan for such a fund within 90 days, including recommendations on funding mechanisms, investment strategies, fund structure, and a governance model.
If established, the wealth fund could position the U.S. alongside Norway, the UAE, China, and Saudi Arabia as countries that launched similar investment vehicles as a way to make direct financial investments using government revenue.
Trump had previously floated the idea of establishing a government investment vehicle that could finance infrastructure projects, manufacturing, and medical research. Treasury Secretary Scott Bessent told reporters that the fund would “monetize” the asset side of the country’s balance sheet and would invest in a combination of liquid assets.
Bitcoin proponents are excited about the prospect of a U.S. sovereign wealth fund as they believe the Trump administration would use government revenues to directly invest in Bitcoin and Bitcoin mining companies. Senator Cynthia Lummis hinted at a possible Bitcoin investment through the wealth fund in a cryptic X post. However, no details about the fund’s structure and its relationship with the potential Bitcoin strategic reserve have been revealed yet.
At the time of writing, Bitcoin (BTC) is trading at $98,613 – up 3.13% in the last 24 hours.
