Tariff Pause Sparks Market Rally Across Crypto and Equities, But Underlying Risks Remain
A surprise statement from former President Donald Trump causes both crypto and conventional markets to show notable increases, which ignites a market rally. With the S&P 500 up 9.5%, its best single-day gain since October 2008, and the crypto market value rising 5.9% to $2.68 trillion, the decision to postpone fresh trade penalties set off a broad-based comeback.
In the last 24 hours, Bitcoin (BTC) shot up as high as $82,500 before marginally retracing to $81,700. Ethereum (ETH) followed with a dramatic 13.4% gain, reaching $1,611, while XRP jumped 13%. Led by Flare (FLR) and Ondo (ONDO), which rose 34.9% and 21% respectively, altcoins also had a significant rebound.
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The rise follows several days of strong selling caused by rising trade tensions between the U.S. and China. Markets had prepared for more suffering until Trump suddenly declared a 90-day halt on intended tariff rises, hence restoring optimism for fresh diplomacy among investors.
Trump stated unequivocally that China will still be subject to 125% tax on important goods going forward notwithstanding the break. The choice comes after China itself raised taxes on U.S. products to 84%, indicating no genuine relaxation of the continuing trade war. There will also stay a 10% blanket tax on most U.S. imports; current car, steel, and aluminium taxes stay unchanged.
Although appreciated, the unexpected market bounce had a cost for traders on the incorrect side of the volatility. Coinglass reports that 131,555 traders were liquidated in 24 hours, for a total loss of $487.1 million. With $138.8 million, Ethereum came next as Bitcoin had the most liquidations at $185.2 million.
Markus Thielen, head of research at 10X Research, cautioned that the rally could be fleeting given “structural headwinds” projected to reappear during the next U.S. corporate earnings season.
Although Tariff Pause is currently fueling a market rally, analysts warn that volatility is still a major theme going ahead. Particularly the cryptocurrency market could keep reacting strongly to geopolitical instability and macroeconomic news.
