The easing of trade hostilities between the U.S. and China has injected a wave of positivity into the cryptocurrency sector. Under an agreement reached in Geneva, China will lower tariffs on American products from a whopping 125% to a mere 10%. Similarly, the U.S. will slash import taxes on Chinese goods down to 30% from a high of 145%. This new trade arrangement will be in place for a duration of 90 days, starting May 14, 2025. As a result of these developments, Bitcoin (BTC) surged past the $104,000 mark, while Ethereum (ETH) showed its strength, exceeding the $2,500 level.
What Impact Does This Have on Markets?
The reduction in trade barriers has rekindled global risk appetite. U.S. market futures, including major indices such as the S&P 500, Nasdaq, Dow Jones, and Russell 2000, saw gains surpassing 2% in pre-market trading. Meanwhile, gold prices fell by 3% as investors moved from safe havens to riskier assets, indicating a profitable shift in investment strategies.
Will Cryptocurrencies Benefit?
Yes, cryptocurrencies are witnessing significant gains. Prominent crypto investor Arthur Hayes urged traders to “buy everything” on social media, signaling a positive outlook. Hayes highlighted that reduced trade tensions could ease inflation pressures and boost liquidity, creating a fertile ground for digital currencies.
Bitcoin leapt over the $100,000 threshold, hitting a high of $106,000. Ethereum experienced its largest daily gain in years, bolstered by its new Pectra update. BTC’s average seven-day volatility increased slightly, while Ethereum’s volatility skyrocketed, indicating potential for aggressive price movements in the near term.
Dr. Sean Dawson from Derive.xyz Research speculated that Ethereum could return to the $4,000 range, with Bitcoin possibly reaching $150,000 should favorable market conditions persist.
Concrete and valuable outcomes include:
- The trade agreement could moderate inflation, encouraging more investments in cryptocurrencies.
- Bitcoin and Ethereum show promising short-term and long-term growth prospects.
- Expect an increase in institutional interest as markets stabilize.
Cryptocurrencies continue to capture attention due to their resilience and growth potential amidst geopolitical changes. As macroeconomic conditions improve, alongside the easing trade tensions, digital assets look poised for a promising trajectory in the coming months.
