Tariff Escalations Push Markets into Uncertainty
Cryptocurrency and technology stocks have entered a volatile new phase, driven by heightened geopolitical tensions and fresh tariffs imposed by the United States on Chinese imports. Analysts warn that this is not due to any industry-specific weaknesses but rather the fragile state of investor confidence and market positioning.
On 15 April, the White House announced a sweeping tariff package, escalating the trade war with China. These include a 125% reciprocal tariff, a 20% tariff addressing the fentanyl crisis, and Section 301 tariffs on various goods, ranging from 7.5% to 100%. Some of these measures raise the total penalty to as high as 245% on specific Chinese imports.
High-Value Sectors in the Firing Line
Aurelie Barthere, principal research analyst at crypto intelligence platform Nansen, described the current climate as a “new phase of the trade war”, with the focus now on high-value sectors such as technology and pharmaceuticals.
Fact sheet on tariffs, investigation into security risks posed by US reliance on imports. Source: White House
“We are facing highly correlated risk assets until, and if, there’s a resolution between the US and China—one leader calling the other and offering concessions,” Barthere told. She added that the current situation is particularly negative for non-US equities, as risk aversion continues to dominate global investor sentiment.
Barthere noted that since November 2024, crypto and US equities have shown high correlation, which has intensified during the recent market correction as investors retreat from expensive and high-risk assets.
Hope for Market Recovery by Mid-2025
Despite the ongoing tensions, Nansen analysts project a 70% chance that the global equities and crypto markets could bottom out by June 2025, followed by a recovery—contingent on the progress of tariff negotiations.
In a potentially significant development, China has appointed a new chief trade negotiator, Li Chenggang. Known for his tough stance, Chenggang previously served as assistant commerce minister during Donald Trump’s first term. Sources within Beijing’s foreign business community describe him as a “very intense” negotiator with experience handling US officials, according to Reuters.
Markets Await Powell’s Guidance
As trade war concerns mount alongside stubborn inflation, investors are closely watching the US Federal Reserve’s next steps. Fed Chair Jerome Powell is set to speak at the upcoming Federal Open Market Committee (FOMC) meeting on 6 May.
BTC, SPX, Nasdaq, gold chart.
Analysts from crypto exchange Bitfinex suggested that any hint of delayed interest rate cuts due to geopolitical or inflationary pressures could weigh heavily on risk assets like Bitcoin. “A hawkish tone could trigger downside,” they said. However, a more neutral or balanced outlook from Powell might offer temporary relief to jittery markets.
Bitfinex analysts further emphasised that the current market movements are less about fundamentals and more about external economic pressures. “Crypto is reacting to macro news not because fundamentals have changed, but because positioning is thin and confidence is sensitive,” they concluded.
With risk assets on edge and the world’s two largest economies locking horns, market participants remain cautiously optimistic for a resolution—but are bracing for more turbulence in the weeks ahead.
