China Slapped with 245% Tariffs – Bitcoin Drops, Gold Hits Record High
Cryptocurrency prices have dropped sharply in the past 24 hours. Investors pulled out of risky assets due to the rising tensions between the US-China trade war.
The US has now raised tariffs on Chinese imports to as high as 245% tariffs on imports as a result of its retaliatory actions and added new limits on chip exports.
Trump has reportedly urged China to initiate the trade talks saying that the US does not need a deal. However, China responded that the US must stop using pressure and threats if it truly wants to resolve the issue through negotiations. “For any dialog to happen, it must be based on equality, respect and mutual benefit,” Chinese Foreign Ministry spokesman Lin Jian said.
The U.S. had previously imposed a 145% tariff on Chinese imports, while China responded with a 125% tariff on U.S. goods.
Bitcoin and Broader Market Declines
Bitcoin has dropped over 2% in response and the broader crypto market dropped 3.75%. Stock markets were also impacted as Nasdaq 100 futures fell over 1% and S&P 500 futures dropped 0.65%. Although Bitcoin stayed relatively stable during earlier sessions, signs suggest that its recent bull run might slow down. It is currently trading at $83,826, down over 2% in the past day.
Besides, Bitcoin dropped below its 200-day simple moving average on March 9, which often signals major trend shifts. According to Coinbase institutional, this move suggests that Bitcoin’s sharp decline marks the start of a new bear market cycle which started in late March itself.
The Bull Market Is Over?
Coinbase Institutional’s research head, David Duong said that a key risk-adjusted performance metric called the Z-score indicates that the crypto bull run likely ended in late February. The market has since been moving sideways neither bullish not bearish, but neutral.
However, crypto prices have held up relatively well. A trader at market maker Wintermute believes that this stability gives traders more confidence to use protective strategies like hedging. Therefore, some prime brokers have moved from being cautious to neutral on risk assets. The upcoming market moves will likely depend on actual economic data.
The Macro Factors
Key economic data is set to be released this month, including a speech from Fed Chair today where investors expect insights on the next rate cut move. Meanwhile, the uncertainty in risk assets has pushed investor towards safer assets like Gold, which is now up over 26% this year, while dollar has dropped 9%. Gold also hit a new record high of $3,300 per ounce amid escalating US China tensions.
Analyst Ali Martinez has recently pointed out that Bitcoin is consolidating within a channel, and since the $83,200 support level is holding strong, there’s a good chance it could bounce back and rise toward the middle or top of that range. It remains to be seen if Bitcoin will rise back up or drop further.
