Crypto Market Takes a Hit Amid U.S.-China Trade Tensions
This week, the crypto market faced a sharp downturn, leading to nearly $20 billion in liquidations.
The main reason for this crypto crash was the renewed trade tensions between the U.S. and China. The downturn led to nearly $20 billion in liquidations, catching many investors off guard. However,history suggests that prices could recover.
The main cause of the crash was the escalating trade war between the two nations. China introduced new tariffs on U.S. ships, investigated Qualcomm, and limited exports of rare earth metals. These metals are crucial for U.S. manufacturing, with China controlling over 70% of the industry. In response, President Trump announced harsher tariffs on chinese goods.
These developments triggered panic selling, pushing the Crypto Fear and Greed Index to 35 and the CNN Money index to 25.Ripple (XRP) fell to $1.3758,a 62% drop from its year-to-date high. Bitcoin (BTC) also tumbled to $106,000 from its all-time high of $126,500.
Though, there are reasons to be optimistic. In the past, crypto prices have rebounded after similar crashes. For example, Bitcoin fell to $74,500 in April but recovered to a new high of $111,165 a month later. Another instance was during the COVID-19 pandemic in 2020, where Bitcoin plunged below $5,000 but surged past $60,000 by march 2021.
investors are now looking to the Federal Reserve for more interest rate cuts,which could help stabilize the market. Additionally, the outcome of Trump’s upcoming trip to South Korea and potential meeting with Chinese President Xi Jinping could ease trade concerns.
