Bitcoin (BTC) saw its recent relief rally lose steam on Tuesday as stock markets reversed earlier gains, weighed down by the Trump administration’s impending implementation of punitive tariffs against China.
The market pullback reflects a broader unease surrounding global trade tensions and their potential impact on the global economy.
After briefly climbing to the $80,000 mark, Bitcoin slumped back to $76,500 before stabilizing below $78,000.
As of late Tuesday, the leading cryptocurrency was down 1.2% over the past 24 hours, while ether (ETH) declined nearly 4% over the same period, falling below $1,500.
The CoinDesk 20 – an index tracking the performance of the top 20 cryptocurrencies by market capitalization (excluding stablecoins, memecoins, and exchange coins) – was down 2.2%, reflecting the overall market downturn.
Crypto equities also felt the negative impact, with Bitcoin miner Bitdeer (BTDR) leading the way with an 8.7% loss.
MicroStrategy (MSTR) declined 5.3%, and Coinbase (COIN) dropped 2.3%.
However, one notable exception was DeFi Technologies (DEFTF), which bucked the trend with a 10.27% gain.
This surge may be attributed to expectations from some shareholders that the Toronto-based company could soon follow in the footsteps of Galaxy Digital (GLXY) and secure a listing on the US Nasdaq, potentially increasing its visibility and attracting new investors.
The S&P 500 and Nasdaq also experienced a reversal of fortune, closing down 0.5% and 0.7%, respectively, after initially surging by approximately 4% earlier in the session.
This highlights the pervasive impact of tariff-related anxieties on investor sentiment.
The market movements occurred as the White House announced that the 104% additional tariffs on Chinese goods would take effect at midnight on Tuesday, further escalating trade tensions between the two economic giants.
Yuan devaluation as a potential catalyst: a boost for Bitcoin?
The tariff news put additional downward pressure on the Chinese currency, with the offshore yuan (CNH) rapidly depreciating against the US dollar during the day to reach 7.4, its weakest level in years.
Some analysts suggest that Beijing could respond to the tariffs by allowing a significant weakening of the yuan, thereby making China’s exports more competitive.
Bitcoin bulls have seized on this idea, arguing that a yuan devaluation would likely lead to capital flight from China, with at least a portion of that capital potentially seeking refuge in Bitcoin.
“If not the Fed then the PBOC will give us the yahtzee ingredients,” wrote Arthur Hayes. “It worked in 2013 , 2015, and can work in 2025,” he continued, referencing previous periods where Bitcoin benefited from Chinese currency devaluations.
Ignore China at your own peril.
“We are currently in a phase of heightened uncertainty, with persistent trade disputes, geopolitical friction, active conflicts and growing fears of a global slowdown,” observed Kirill Kretov of cryptocurrency trading automation platform CoinPanel, speaking to CoinDesk in a Telegram note.
Kretov anticipates that these choppy market conditions will persist, with shallow liquidity on both crypto and traditional markets exacerbating volatility.
“Until more participants adjust to and capitalize on this environment, we’re unlikely to see a strong directional trend,” he concluded.
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