Americas Crypto Daybook: Red Tide May Persist Longer Than Anticipated

By Omkar Godbole (Times are in ET unless otherwise stated) The cryptocurrency market is submerged in a sea of red, mirroring the growing risk aversion in traditional markets, with the recent tariffs imposed by Trump being the catalyst. On Friday, the president introduced a 25% tariff on imports from Canada and Mexico, and a 10% tariff on China, prompting retaliatory measures that have reignited a trade war similar to the one in 2018. The prevailing sentiment on social media and among analysts is that the crypto market's decline, triggered by the tariffs, is temporary and that bitcoin, currently at $86,817.46, will soon bounce back. However, there are indications that suggest otherwise. Firstly, Trump's actions have dispelled the notion that he intends to bolster markets and would use minor tariffs as a bargaining tool. In reality, he has threatened to increase tariffs if trading partners retaliate. Given that Canada and Mexico have responded with their own measures, the possibility of further tariff hikes is significant. Geo Chen, a macro trader and author of the popular Substack-based newsletter Fidenza Macro, shared his insights with subscribers via email: "In my view, the tariffs will remain in place for several months, with the risk of increase, as Canada has pledged to retaliate and China has initiated a lawsuit against the U.S. in the World Trade Organization. These responses could escalate the situation. The best we can hope for is a partial rollback of tariffs once negotiations conclude." Chen emphasized that the tariffs are driven by concerns over trade deficits, rather than the fentanyl crisis, as Trump often claims. He added that markets may take days or weeks to grasp this, leading to persistent volatility. Moreover, the latest tariffs affect $1.3 trillion worth of goods imported from the three nations, which is seven times larger in value than the initial tariffs imposed in 2018. This makes the current situation appear more destabilizing than the previous episode, when the S&P 500 initially dropped 9% from its peak in March before quickly rebounding. In other words, the potential impact may be greater this time around, posing a challenge for risk-on assets like bitcoin. As one anonymous crypto trader noted: "Despite the talk of deals, this move doesn't feel temporary." Remain vigilant. Key Events to Watch: Upcoming Token Events Conferences: Token Talk By Shaurya Malwa Derivatives Positioning Market Trends: Bitcoin Statistics: Technical Analysis Crypto Equities ETF Flows Spot BTC ETFs: Spot ETH ETFs Source: Farside Investors Overnight Flows Chart of the Day While You Were Sleeping In the Ether