- Bitcoin demonstrated resilience, remaining above $84,000 on Wednesday as tensions escalate in the US-China trade dispute.
- The United States declared that China may incur a total tariff of 245% on imports following its retaliatory measures over the weekend.
- Additionally, China has reportedly liquidated a significant portion of its seized cryptocurrencies, responding to an economic downturn amid the ongoing global trade conflict.
On Wednesday, Bitcoin (BTC) faced minimal pressure despite the Chinese government offloading parts of its confiscated cryptocurrency assets. This move occurs after a recent White House statement indicated that China could face tariffs soaring up to 245% on exports to the US due to its retaliatory actions over the weekend.
Bitcoin maintains $84,000 as US-China tariff clash unfolds
Bitcoin retained its position at the $84,000 mark on Wednesday amid increasing volatility in the financial markets triggered by escalated trade tensions between the US and China.
The US administration announced that China is subject to tariffs reaching up to 245%, comprised of 125% reciprocal tariffs, a 20% tariff addressing the fentanyl crisis, and Section 301 tariffs on certain goods ranging from 7.5% to 100%. This decision followed China’s response, which included raising its tariffs on US imports to 125% over the weekend.
This news led to declines in major stock indices, with the S&P 500 and Nasdaq-100 dropping by 2.24% and 3.04%, respectively. Bitcoin’s strength in the face of these developments suggests a potential decoupling from traditional equities.
In a note provided to FXStreet, Messari analyst Dylan Bane mentioned that a prolonged tariff environment might facilitate Bitcoin’s separation from the stock market.
“Ongoing tariffs could initiate structural economic transformations, resulting in Bitcoin’s decoupling from conventional assets as it gains traction as a distinct store of value,” Bane remarked.
He highlighted the tariffs’ effects on the global economic landscape, which could disrupt international trade alliances and adversely affect the US Dollar’s status as the world’s reserve currency. Consequently, prolonged economic downturns might transition Bitcoin’s function from a tradable asset to a long-term store of value.
“The increased economic uncertainty and rising institutional distrust accompanying such transitions could also elevate interest in cryptocurrencies as a financial infrastructure independent of any single government or monetary authority,” Bane concluded.
In the meantime, reports from Reuters indicate that China has started liquidating its seized cryptocurrency assets following economic challenges. The report stated that local Chinese governments utilized private firms to sell confiscated cryptocurrencies abroad for cash, aiding public budgets.
To establish a systematic approach for managing its seized cryptocurrencies, experts mentioned that China might consider a strategy similar to Trump’s by forming a strategic Bitcoin reserve. As of December 2024, Chinese local governments were believed to hold around 15,000 BTC.
