The cryptocurrency market plunged alongside global stocks as President Donald Trump's warning of "massive" tariffs on Chinese imports triggered a risk-off sentiment, wiping out $370 billion in market cap. Bitcoin (BTC) dove below $119,000 for the first time in weeks, settling at $119,028—down 1.7% daily—while Ethereum (ETH) and Solana (SOL) fell 5% and 4%, respectively, to $4,107 and $211. Trump's threat, part of escalating trade tensions, echoed April's "Liberation Day" tariffs, which caused a 12% BTC drop and $2 trillion S&P 500 loss. This analysis explores the tariff's impact, market reactions, and trading signals. Position amid the volatility.
Tariff Warning's Immediate Shockwave
Trump's announcement of 10% tariffs on Chinese goods, effective immediately, reignited fears of a full trade war, with Canada and Mexico vowing retaliation. Crypto reacted swiftly: BTC hit $91,441 overnight (down 6.2%), ETH $2,592 (down 25% in three days), and XRP/SOL lost 9% and 7%. Liquidations topped $2.21 billion, 85% longs, per Coinglass. The sell-off mirrored stock declines, with S&P 500 losing $2 trillion in minutes, as tariffs raise inflation and disrupt supply chains.
On-chain data shows panic: BTC exchange inflows surged 20%, whale sells +5%, sentiment dipping to 65% bullish from 71%. ETH's 30% three-day loss, its worst since November 2022, highlights altcoin vulnerability. Trump's policy, targeting currency manipulation and steel dumping, pressures the yuan, potentially boosting BTC as a hedge, per BitMEX's Arthur Hayes. Yet, short-term, risk aversion dominates, with Nasdaq correlation at 0.8 amplifying crypto's slide.
Broader Implications: Trade War and Crypto Resilience
Tariffs could accelerate dollar fragmentation, favoring BTC as "digital gold," but immediate effects are bearish. JPMorgan notes tariffs may delay Fed rate cuts, raising bond yields and hurting speculative assets. Crypto's $2.47T market cap lost 9% since the announcement, with memecoins like PEPE down 10%. European MiCA compliance offers some stability for stablecoins, but U.S. policy uncertainty freezes ETF approvals, risking $10B inflows.
Bullish counterpoints: 45% of Myriad Markets predictors see BTC at $140,000 before $110,000, and Hayes predicts inflation from tariffs will lift BTC "violently faster." Historical patterns show crypto rebounding post-tariff shocks, with BTC gaining 8% in July despite similar tensions.
Trading Signals: RSI and MACD
Based on recent trends:
BTC ($119,028): RSI at 55 (neutral-bullish). Bullish MACD (+0.12)—target $125,000 (5% upside). Fibonacci support at $115,000, resistance at $122,000.ETH ($4,107): RSI at 58. Bullish MACD (+0.10)—target $4,500 (9% upside). Fibonacci support at $3,900, resistance at $4,300.
Overall: RSI 55–58 signals buys on dips for 5–9% gains. Risks: trade war escalation (5–7% dip); hedge with USDC.
Conclusion: Buy the Tariff Dip?
Trump’s China tariff warning sank BTC and ETH, mirroring stock slides and erasing $370B market cap. Yet, with RSI 55 and bullish MACD, this dip could be a buying opportunity—target $125,000 BTC and $4,500 ETH. Monitor retaliation and Fed signals for rebounds.
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