The cryptocurrency market’s relief rally came to an end on Tuesday as stock prices receded from early gains, influenced by the government’s announcement of imminent punitive tariffs on China.
After a short surge that brought bitcoin (BTC) to the $80,000 threshold, it quickly retreated to around $76,500, eventually settling below $78,000. Over the past 24 hours, bitcoin recorded a decline of 1.2%, while ether (ETH) dropped nearly 4%, falling beneath the $1,500 mark. The CoinDesk 20, an index that tracks the leading 20 cryptocurrencies by market cap (excluding stablecoins, memecoins, and exchange tokens), saw a decrease of 2.2%.
Shares connected to the crypto space also experienced declines, with bitcoin mining company Bitdeer (BTDR) showing a significant loss of 8.7%. Other notable decreases included Strategy (MSTR), down 5.3%, and Coinbase (COIN), which fell by 2.3%. In contrast, DeFi Technologies (DEFTF) emerged as an exception, gaining 10.27%, possibly fueled by expectations that it might soon follow in the footsteps of Galaxy Digital (GLXY) to be listed on the U.S. Nasdaq.
In broader markets, the S&P 500 and Nasdaq indices fell by 0.5% and 0.7%, respectively, reflecting a stark reversal from earlier session gains of approximately 4%.
This price movement coincided with the White House’s announcement that an additional 104% tariff on goods imported from China would begin at midnight on Tuesday. The news intensified pressure on the Chinese yuan, which rapidly depreciated against the U.S. dollar during the day, reaching 7.4 — its weakest rate in years.
Some analysts speculate that Beijing might respond to these tariffs by permitting a significant devaluation of the yuan, potentially making exports from China more competitive. Bitcoin advocates have highlighted that a depreciation of the yuan could trigger capital flight from China, with a portion of that capital possibly seeking refuge in bitcoin.
“If not the Fed then the PBOC will give us the yahtzee ingredients,” expressed one prominent figure. “It worked in 2013, 2015, and can work again in 2025. Ignore China at your own risk,” they added.
Additional insights: Analysts remain hopeful for bitcoin as China unexpectedly fixes the yuan above the 7.2 threshold.
“At present, we are navigating through a period of heightened uncertainty characterized by ongoing trade tensions, geopolitical friction, active conflicts, and increasing concerns over a global economic slowdown,” noted a cryptocurrency trading expert from a platform specializing in automated trading.
They further emphasized that turbulent market conditions are likely to persist, with thin liquidity in both cryptocurrency and traditional markets intensifying volatility. “Until more players adapt to and make the most of this climate, we’re unlikely to witness a strong directional trend,” they concluded.