- US imposes reported 104% tariff hike on Chinese goods, escalating trade war
- Crypto markets fall amid risk-off sentiment; Fear & Greed Index hits ‘Extreme Fear’
- Context: Immediate crypto sell-off contrasts with uncertain future capital flight theory
The trade war between the United States and China has ratcheted up sharply Tuesday, as the White House announced a steep tariff increase on Chinese imports. Reportedly involving a 104% hike on certain goods, the new tariffs took effect April 9, 2025, marking a serious escalation of trade tensions.
In response to the U.S. announcement, China had imposed a 34% tariff increase on American goods. With Beijing failing to reverse its position, the U.S. decided to move forward with the additional 104% tariff, further deepening the trade rift. While the new tariff is a heavy blow to China, the full financial fallout remains unclear.
Related: ‘Ignore China At Your Peril’: Ben Zhou Flags Yuan Devaluation’s BTC Impact
Markets React: Crypto Sees Red
Financial markets, including cryptocurrencies, reacted negatively across the board. The total market cap of the crypto sector dropped to $2.44 trillion, marking a 2.84% decrease over the last 24 hours.
Bitcoin (BTC) is currently priced at $75,773, down by 3.40% in the past 24 hours. Ethereum (ETH) has also seen a drop, now priced at $1,458.22, a decline of 7.53%. XRP is trading at $1.80, losing 3.04% of its value in the same period.
Related: US Department of Justice Dissolves Its Crypto Enforcement Team NCET
Other altcoins like BNB, Solana (SOL), and Dogecoin (DOGE) also posted declines. The Fear & Greed Index registered 15, indicating “Extreme Fear” gripping the market. This suggests many investors are seeking safer ground amid the rising global economic uncertainty driven by the escalating U.S.-China tensions.
Could Capital Still Flow to Crypto?
Despite the recent downturn, some analysts still believe that there could be a flight of capital into cryptocurrencies if China’s economic situation deteriorates from the tariffs.
They point to history: during periods of economic instability in China, such as the 2015 yuan devaluation, investors have turned to Bitcoin as a way to protect their wealth. Bitcoin prices surged at the time, as investors sought refuge in alternative assets to hedge against the falling value of the Chinese currency.
However, with the 104% tariff still in effect and uncertainty clouding China’s economic outlook, many are questioning if this situation will trigger another surge in Bitcoin demand.
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