Bitcoin Dips Amid Intensified US-China Trade War and New Tariffs
April 4, 2025 – The ongoing trade war between the United States and China has taken a sharp turn, with Beijing announcing a sweeping 34% tariff on all U.S. imports. This move, seen as a direct response to Washington’s latest tariff escalation, has sent shockwaves through global financial markets—prompting a notable reaction from Bitcoin investors.
The leading cryptocurrency, often considered a hedge against economic instability, saw a 3% decline within hours of the announcement, briefly dipping below $82,000. This price movement has raised concerns among traders and analysts about the potential long-term implications of the escalating trade tensions.
Bitcoin Reacts to Trade War Escalation
China’s official news agency, Xinhua, reported that the additional tariffs will come into effect on April 10. The Chinese Ministry of Commerce criticized the U.S. for violating World Trade Organization (WTO) regulations, stating that the new tariff policies undermine global trade stability.
“This is a typical act of unilateral hegemony that harms the stability of the global economic and trade order. China firmly opposes this,” a ministry spokesperson stated, emphasizing China’s strong stance against the U.S.’s “Reciprocal Tariff” measures.
President Trump’s earlier tariff hikes on Chinese goods had already raised economic tensions, and China’s retaliatory move further exacerbates market uncertainty. As a result, Bitcoin’s price dropped from $84,600 to $82,000, reflecting a growing risk-off sentiment among crypto investors.
Market-Wide Impact and Bearish Sentiment
Following the news, Bitcoin’s long/short ratio fell below 1, indicating an increase in bearish sentiment, with short sellers gaining dominance in the market. Traditional financial markets also took a hit:
- The S&P 500 dipped from 5,260 to 5,250 points.
- The Dow Jones Industrial Average saw a steeper decline, falling from 41,100 to 40,500 points.
The market reaction underscores broader concerns about economic instability. The financial analysis platform The Kobeissi Letter described this latest development as the beginning of the “Third World War” in global trade.
What’s Next for Bitcoin Amid Escalating Trade Tensions?
Despite its reputation as a decentralized store of value, Bitcoin has often behaved like a risk-sensitive asset during periods of geopolitical and economic turbulence. Historical data from the 2018-2019 U.S.-China trade war shows that Bitcoin faced significant sell-offs as tariff battles intensified, only to recover later as its appeal as a hedge strengthened.
Another key factor to consider is China’s dominance in the cryptocurrency mining industry. Companies like Bitmain manufacture a significant portion of ASIC mining equipment, which is essential for Bitcoin mining. With the U.S. now facing a 34% tariff on Chinese technology imports, American Bitcoin miners could experience increased operational costs, potentially impacting network hashrate and profitability.
However, some analysts suggest that prolonged trade disputes could ultimately benefit Bitcoin. If rising tariffs contribute to inflation or weaken traditional fiat currencies, more investors may seek refuge in decentralized assets like Bitcoin.
“It’s not gold, and it’s not the yen. Instead, Bitcoin is emerging as a risk-dynamic asset – one that doesn’t crumble like high-growth stocks but also doesn’t attract the same flight-to-safety flows as traditional safe havens,” said Stella Zlatarev, editor at Nexo Dispatch.
While short-term market sentiment remains bearish, historical trends indicate that Bitcoin could regain its footing once market participants digest the implications of this latest trade war development. Investors will be closely watching price movements in the coming weeks, as well as potential policy shifts from both economic superpowers.