The crypto market is bouncing back as U.S. policy changes ease trade restrictions after a period of tariff-driven sell-offs. According to CoinGeko, Bitcoin, Ethereum, and other digital assets are regaining value, leaving investors cautiously optimistic about the market’s stability.
Market Recovery and Digital Asset Rally
Earlier, Bitcoin fell to a low of about $92,111, wiping out roughly $1.23 billion in positions following the tariff announcement. As a result, investors who had been riding its surge past $100,000 began selling off their holdings, while reduced ETF inflows and a decline in overall market confidence added to the pressure.
Within 24 hours, BTC bounced back to about $101,000, marking a 7% gain. Ethereum also recovered strongly, rising nearly 10% from $2,460 to $2,800, although it’s still 12% below last week’s level. Overall, the crypto market increased by 8.5% to roughly $3.43 trillion, and the Crypto Fear & Greed Index jumped from 44 to 72, showing a boost in optimism.
Diplomatic Resolutions Easing Trade Tensions
On February 3, President Trump’s tariff announcement—imposing a 10% duty on China and 25% on Canada and Mexico—triggered uncertainty that rattled risk assets, especially cryptocurrencies. However, swift diplomatic efforts eased tensions.
Canadian Prime Minister Justin Trudeau said on social media that he had a good call with President Trump. He announced that Canada is launching its $1.3 billion border plan. This plan includes new helicopters, upgraded technology, and more personnel, along with better coordination with American partners to stop the flow of fentanyl. This move was aimed at creating space for broader discussions on border security and trade relations.
Continuing Uncertainty Amid Diplomatic Caution
Despite these encouraging developments, uncertainty lingers. In a subsequent interview with Bloomberg TV, Trump clarified that while agreements with Canada and Mexico are progressing, no final resolutions have been reached.
He emphasized that tariffs on Mexico, in particular, might still be implemented, stating: “The US and Mexico have not agreed on tariffs and they could still go into effect. Mexico agreed to send 10,000 National Guard officers to guard the border and stem the flow of fentanyl. Talks with Canada are ongoing.”
This ambiguity continues to cast a shadow over the recent market recovery, as traders remain alert to the possibility of renewed volatility if further geopolitical shifts occur. Similarly, Mexico quickly followed suit. President Claudia Sheinbaum confirmed that Mexico would also benefit from a one-month tariff suspension, as both nations engaged in negotiations to strengthen land border agreements.
A tweet from The Kobeissi Letter captured the moment with palpable excitement: “Just 48 hours after the trade war began, President Trump has reached a deal with BOTH Canada and Mexico. This includes both countries deploying 10,000 personnel to monitor the border and reduce drug trade. US tariffs on Canada and Mexico will be…”
These temporary resolutions have instilled hope that the worst market volatility may soon be behind investors, at least for the short term.
China’s Exclusion and DeepSeek AI Spur Crypto
Chinese startup DeepSeek has developed cost-efficient AI models that rival U.S. technology, challenging American dominance. It sent shockwaves across global finance markets, causing a sudden downturn in both crypto and AI-related assets. The overall cryptocurrency market dropped by about 6.49% to a total market cap of $3.37 trillion, while major AI coins fell roughly 10%, with the entire AI coin sector declining by around 10.20%.
The merging of AI and digital currencies could reshape global financial systems with both countries working to boost their economic influence and redefine trade dynamics. However, a recent U.S. tariff on China has added extra tension. While Canada and Mexico enjoy a tariff pause, China remains excluded and is reportedly preparing to negotiate.
Conclusion:
The easing of tariffs on Canada and Mexico has provided a much-needed breather for the crypto market, leading to a rebound in Bitcoin, Ethereum, and overall market sentiment. However, as traders and investors celebrate this temporary relief, they must remain cautious. The delicate balance between diplomatic progress and lingering uncertainties means that any further geopolitical disruptions could quickly reverse the gains. In this dynamic environment, market participants are advised to stay informed and prepared for potential shifts as the situation unfolds.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. All predictions are based on current market analysis and may change over time. Always perform research and consult with a financial professional before making any investment decisions.
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Frequently Asked Questions (FAQs)
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1.Why did the crypto market rebound?
Diplomatic moves eased trade restrictions, restoring investor confidence.
2.How much did Bitcoin recover?
Bitcoin rebounded from $91,200 to $101,000, a 7% gain.
3.What about Ethereum’s recovery?
Ethereum surged nearly 10%, rising from $2,460 to $2,800.
4. How did the overall crypto market react?
The market rose 8.5% to $3.43 trillion, with optimism increasing.
5. What triggered the market drop initially?
U.S. tariffs on China, Canada, and Mexico caused investor uncertainty.
6. How did Canada and Mexico respond to tariffs?
Both secured a temporary 30-day pause while negotiating border security.
Glossary of Key Terms:
Tariff: A tax imposed by a government on imported or exported goods.
Bitcoin: The first and most well-known cryptocurrency, often referred to as digital gold.
Ethereum: A digital platform that runs decentralized applications and smart contracts for transactions.
Trade War: A situation where countries impose tariffs or other trade barriers against each other in response to trade disputes.
DeepSeek AI: DeepSeek AI is a Chinese-developed artificial intelligence platform that rivals ChatGPT and has significantly disrupted market dynamics.
References:
CoinGeko: https://www.coingecko.com/
Bloomberg: https://www.bloomberg.com
Kobeissi Letter’s Tweet: https://t.co/mRPKp4PqIJ
Forbes: https://www.forbes.com
Wall Street Journal: https://www.wsj.com
The price predictions and financial analysis presented on this website are for informational purposes only and do not constitute financial, investment, or trading advice. While we strive to provide accurate and up-to-date information, the volatile nature of cryptocurrency markets means that prices can fluctuate significantly and unpredictably.
You should conduct your own research and consult with a qualified financial advisor before making any investment decisions. The Bit Journal does not guarantee the accuracy, completeness, or reliability of any information provided in the price predictions, and we will not be held liable for any losses incurred as a result of relying on this information.
Investing in cryptocurrencies carries risks, including the risk of significant losses. Always invest responsibly and within your means.
