The pending worldwide trade war has slowed down both crypto market activities and traditional financial operations. The market valuation of Bitcoin (BTC) dropped by over 17% since Donald Trump announced import tariffs for Chinese goods on January 20, 2025 after his inauguration. Bitcoin leads a market correction which affects all risk assets in a very significant way while this volatile market experiences substantial price drops. Nightfall remains present according to Nicolai Sondergaard who serves as a research analyst at Nansen. The market dynamics created by the upcoming April 2 tariffs issued by Trump are expected to maintain their influence over the entire period leading up to that date. At present no one can expect a quick market recovery as they must endure a nervous watch until April 2.
When Sondergaard joined Cointelegraph’s Chainreaction X show on March 21 he emphasized that global tariff issues had become the main factor that affects both traditional markets and cryptocurrencies. He’s got a point. The price of Bitcoin has followed extreme ups and downs along with many other cryptocurrencies throughout its existence. The Ether market experienced two adverse factors which could push prices down to $1.8K because of ETF withdrawal activity combined with tariff uncertainties as described in my earlier article this month. All markets remain unclear due to tariff policy uncertainties which produces an uncertain future for crypto risk investments.
April 2: Potential Turning Point?
So, what’s the magic date? April 2, 2025. Trump’s tariffs will activate during April 2 unless any new agreements emerge. Sondergaard suggests countries dropping their tariffs will become possible if they successfully reach deals but approaches the prediction with caution. His answer required complete consensus from all involved parties according to him although the decision remains a trillion-dollar mystery. Treasury Secretary Scott Bessent suggested a postponement earlier but market actors choose to ignore these possible future developments as the deadline draws near. A trade resolution, no matter what form it takes, could serve as the upcoming market-changing event that ends the crypto-stocks stagnation. From April 2 through July Sondergaard predicts that the market has a chance to rebound which would provide a necessary boost. Last week I highlighted the SEC crypto task force which you will remember. The market-driven anxiety stemming from trade war tensions overrides all the recent favorable regulatory announcements.
The situation encompasses more than just duties. The current high interest rates from the Federal Reserve continue to extend extra pressure on the market situation. According to Sondergaard the Fed will wait until real negative circumstances surface before cutting interest rates because investors remain cautious in their risk-taking mindset. According to the CME Group’s FedWatch tool markets currently assign an 85% probability that interest rates will remain unchanged when the FOMC meets on May 7. High interest rates from the Fed continue strangling Bitcoin along with its cryptocurrency companions since bonds become more financially attractive than risky digital assets.
Glimmer of Hope Amid the Gloom
The market provides a slight positive sign when viewed from the right angle. Nexo dispatch analyst Iliya Kalchev explains to Cointelegraph that the Fed considers inflation and recession indicators associated with trade tariffs to be short-term in nature. The statement indicates a potential temporary nature of the investment duration. A positive assessment from him would point to a potential path of fewer challenges. The improved market perception of upcoming economic data readings stems from diminishing inflation and stable economic factors which might support Bitcoin and digital assets according to Kalchev. He expects Consumer Confidence as well as Q4 GDP and jobless claims together with the upcoming PCE inflation release will matter to us most. The crypto market may benefit heavily from any Fed decision to relax its stance as reported by upcoming economic data releases.
Currently the struggle persists between apprehension and optimism. Trade war tensions remain the dominant issue in the market since they exceed all other positive developments including Trump administration moves that interested in a crypto strategic reserve for stablecoins. The market will remain volatile until late-April arrives combined with any unexpected breakthroughs in Fed policy. A resolution of tariffs combined with Federal Reserve acceptances could potentially create the perfect conditions for Bitcoin and other cryptocurrencies to experience rapid growth. Watch out because this story maintains an active status.
