Cryptocurrencies Rebound, but Tariff Uncertainty Looms
Cryptocurrencies are experiencing a modest recovery in an environment of high uncertainty, as markets cautiously await the impact of Trump’s trade policies and the increasing risk of a U.S. recession.
On Tuesday, cryptocurrencies saw a slight rebound, with Bitcoin (BTC) rising around 2% to approach $84,000 again, while Ethereum (ETH) climbed 3% in an attempt to reclaim the $1,900 mark. However, both cryptocurrencies had experienced declines in the past 24 hours, with BTC touching $81,300 and ETH dropping to $1,778.
Among other altcoins, gains were more moderate. Tokens such as XRP, Solana (SOL), and Binance Coin (BNB) showed restrained rebounds, while cryptocurrencies like Cardano (ADA), Dogecoin (DOGE), and Chainlink (LINK) increased by approximately 4%. None of the major assets by market capitalization recorded significant declines.
Market Uncertainty and Economic Concerns
This movement comes amid a highly uncertain backdrop, as U.S. President Donald Trump is set to unveil details tomorrow on the reciprocal tariffs he plans to impose on trade partners—a measure he has dubbed “Liberation Day.” Trade tensions, particularly with the European Union, Canada, Russia, and China, are raising significant concerns among investors. The first quarter ended with mixed market results: while Europe managed to withstand the impact of Trump’s policies, the U.S. experienced a notable downturn.
Most analysts are not optimistic about the economic implications of Trump’s tariffs. Goldman Sachs, for instance, has raised the probability of a U.S. recession to 35%, a significant increase from its previous forecast. Additionally, GDP growth is now expected to slow to 1.5%, reflecting growing fears over the impact of Trump’s policies on the global economy. Kathleen Brooks, head of research at XTB, warns that the White House could be jeopardizing not only the U.S. economy but also the global financial landscape by implementing these tariffs.
Crypto Market Reactions
In this scenario, cryptocurrencies—which have often shown correlations with the Nasdaq—have also suffered declines, erasing much of the gains made after Trump’s election victory. The prevailing risk aversion is evident even within the crypto market: the Ethereum-to-Bitcoin (ETH/BTC) ratio has fallen to its lowest level in five years, signaling that investors are seeking safer assets even within the highly volatile cryptocurrency space.
Ethereum’s weakening against Bitcoin is particularly noteworthy, as this is the first time it has occurred within 12 months of a Bitcoin halving. In previous cycles, Ethereum outperformed Bitcoin during the first year after a halving. This time, however, the ratio has dropped by more than 50%, marking a significant shift in investor sentiment.
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