Following a fleeting moment of relief in U.S. markets on Wednesday, the situation turned grim again on Thursday as attention shifted towards a potentially escalated conflict between the U.S. and China.
Bitcoin (BTC), which had surged over 8% the previous day, retreated by about 4% to below $80,000 on Thursday. This drop coincided with a sharp decline in the Nasdaq, which experienced a fall of 5.5% after yesterday’s spectacular 12% rise, as traders evaluate the latest developments in U.S. President Donald Trump’s tariff strategies.
Shares in cryptocurrency companies also suffered losses. MicroStrategy (MSTR) dipped by 11.2%, while Coinbase (COIN) and Marathon Digital (MARA) dropped by 8.1% and 9.3% respectively.
As stocks already registered significant declines for the day, the sell-off intensified after a tweet emerged indicating that a White House official confirmed a total tariff rate on China at 145%, surpassing the 125% mentioned by President Trump yesterday.
The Executive Order specifies that the “reciprocal” tariff rate escalated from 84% to 125% overnight. When this is coupled with the existing 20% tariff on fentanyl-related items, the total rate climbs to 145%.
In response to Trump’s initial tariffs, China announced it would curtail imports of American films, further heightening tensions in the trade relationship between the two nations.
On another front, gold prices soared by 3%, reaching a new record high of $3,168. The DXY index, which tracks the U.S. dollar against a range of foreign currencies, fell below 101, effectively erasing its entire rally since November and now down by 9% from January’s peaks.
A politically charged atmosphere
“The macroeconomic environment remains uncertain,” noted Kirill Kretov, a senior expert at a cryptocurrency trading automation platform. “This is a politically charged situation where headlines can dramatically shift market sentiment almost instantaneously.”
“Trade policy is a pivotal factor at this stage,” Kretov added, pointing out that the fluctuating tariff policies from the Trump administration are likely to exacerbate inflation concerns. “Any escalation in this arena could complicate the Federal Reserve’s decision-making process and could potentially upset the current market trajectory,” he cautioned.