Trade Wars and Crypto: A Comedy of Errors Unfolds!

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It appears that our dear friends in the cryptocurrency and stock markets have stumbled into what can only be described as a “new phase of the trade war.” Yes, indeed! This delightful turn of events comes courtesy of the ongoing tariff tussles between the United States and China, which seem to be escalating faster than a cat on a hot tin roof. 🐱🔥

On the 15th of April, the White House, in a fit of bureaucratic enthusiasm, released a fact sheet that announced tariffs on Chinese imports that could reach a staggering 245%. One can only imagine the look on the faces of the Chinese officials when they read that! 😲

The penalties, as outlined by the White House, include a “125% reciprocal tariff” (because why not?), a 20% tariff to tackle the fentanyl crisis (as if that’s going to help), and Section 301 tariffs on specific goods ranging from 7.5% to 100%. It’s a veritable buffet of tariffs! 🍽️

According to Aurelie Barthere, a principal research analyst at the crypto intelligence platform Nansen (a title that sounds rather grand, doesn’t it?), we are now firmly entrenched in this “new phase” of the global trade war. She claims that the focus is now on high-added-value sectors like Tech and Pharma, as if they were the stars of a rather dull play. 🎭

“Until and IF we see a resolution of the US-China conflict (one leader picks up the phone and gives some concessions to the other), we are facing highly correlated risk assets,”

Ah, the sweet sound of optimism! Barthere also mentioned that this situation is rather grim for non-US equities. It seems that US equities and crypto have been “highly correlated” since November 2024, which is a fancy way of saying they’re both in a bit of a pickle. 🥒

The recovery of global equities and cryptocurrency markets now hinges on the tone of global tariff negotiations. Nansen analysts have predicted a 70% chance that we’ll hit rock bottom by June 2025 before we start to see any semblance of recovery. Fingers crossed! 🤞

In a twist worthy of a Shakespearean drama, China has recently appointed a new chief trade negotiator, Li Chenggang, who is described as a “very intense” negotiator. One can only hope he brings a sense of humor to the table! 😂

Eyes on Powell’s next move

As tariff tensions rise alongside inflation-related concerns, all eyes are now on US Federal Reserve Chair Jerome Powell’s upcoming speech during the next Federal Open Market Committee (FOMC) meeting on May 6. Will he be the hero we need or the villain we deserve? 🎭

“Markets were on edge for any signal that the Fed might delay rate cuts due to sticky inflation or heightened geopolitical risk,” analysts from Bitfinex exchange told CryptoMoon, adding that if Powell leans hawkish, risk assets like Bitcoin could take a nosedive:

“A neutral or balanced tone may calm markets more than they already have over the past week with some significant recoveries across many risk assets and particularly crypto where many lower market cap assets have moved 30–40% off the lows.”

“Crypto is reacting to macro news not because fundamentals have changed, but because positioning is thin and confidence is sensitive,” the analysts added, which sounds rather like a delicate soufflé, doesn’t it? 🍰

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2025-04-17 18:00