US and China Trade War Escalates as Tariffs Affect Crypto Markets Again This Week
It seems crypto can't catch a break this week, as prices are being impacted again, this time due to the retaliatory tariffs imposed on the US from China.
Last week Trump and the United States imposed tariffs on goods from China, escalating the ongoing trade tensions between the two giants. In response, China has today announced its own set of retaliatory tariffs targeting key US exports, including oil, agricultural equipment, coal, and liquefied natural gas (LNG). This move comes as part of a tit-for-tat strategy in their trade war, which has seen both nations imposing duties on each other's products in an attempt to protect domestic industries and balance trade deficits.
The Chinese Ministry of Finance declared that starting February 10, a 15% tariff will be applied to US coal and LNG, while a 10% tariff will hit US oil and agricultural equipment. This announcement has immediately stirred markets, with investors and traders worldwide watching closely as the ripple effects begin to unfold. The tension isn't limited to traditional markets; the cryptocurrency sector has also felt the impact today, with drops in major digital assets.
Impact on Cryptocurrency Markets
Bitcoin, which had recovered from the Mexico and Canada tariff drama, was trading around $102,000, has now seen a decline to around $99,000. This drop reflects investor uncertainty and a shift towards risk aversion amid the trade war news. Ethereum, another leading cryptocurrency, followed suit, falling from $2,900 to $2,700. The sentiment in the crypto market has been notably bearish, with investors pulling back from positions that could be seen as high risk in light of the global economic turbulence.
Similarly, Solana experienced a decrease, moving from $220 to $216. While this might seem like a smaller change, in the volatile world of cryptocurrencies, even slight movements can signify larger trends. The overall market cap of cryptocurrencies has dipped, reflecting a broader concern about how these trade disputes could influence global economic stability and, by extension, the speculative nature of digital currencies.
This escalation in tariffs between the US and China underscores the interconnectedness of global trade and financial markets. As nations engage in economic strategies to protect their interests, the repercussions are felt across various sectors, including the burgeoning cryptocurrency market. Investors are now more cautious, recalibrating their portfolios in anticipation of potential further volatility as this trade war continues to unfold.