Trump’s Trade War Starts To Chill, Crypto Go Up

The crypto markets got a much needed shot of adrenaline this week as BTC flew past $91,000 after US Treasury Secretary Scott Bessent shared some good vibes about potential progress in the escalating trade war with China. BTC’s 4.5% surge marked its biggest single-day gain in two weeks, with altcoins like ETH ,SOL and XRP happily riding Bitcoin's coattails.

The rally kicked into high gear after Bessent, speaking at a private JP Morgan event in Washington, suggested the current tariff standoff between the world's two largest economies might be nearing its expiration date. "This trade war is unsustainable for both sides," Bessent reportedly told attendees, sparking immediate speculation about potential de-escalation. His comments came just days after President Trump lowered "reciprocal" tariffs on most trading partners to 10% while maintaining tougher 25% levies on Chinese imports.

"We're seeing a classic 'risk-on' move across asset classes. Both traditional and crypto markets are pricing in perceived progress on tariff negotiations."
- Strahinja Savic of FRNT Financial

But Bitcoin's performance was particularly interesting given its recent behavior. While stocks tanked Monday, BTC actually gained a lot of ground.

Finally!

"Bitcoin's rally while risk assets faltered signals growing confidence from institutions treating it as a store of value," - Alice Liu, CoinMarketCap

This "digital gold" narrative got another boost as gold prices also climbed amid the trade uncertainty.

And the good vibes spread quickly through crypto markets too, with ETH jumping 8%, SOL 6% and XRP 7%. A coordinated rally like this generally shows that traders are moving back into crypto across the board after weeks of trade war jitters had suppressed everything.

The White House has been walking a delicate tightrope on trade policy. While maintaining a hard line against China—the administration just announced new restrictions on Chinese steel imports—there are signs of flexibility elsewhere. Press Secretary Karoline Leavitt revealed the trade team currently has "18 proposals on paper" as they meet with representatives from 34 countries this week.

Trade tensions might seem like distant macroeconomic noise, but they ripple through crypto markets in surprisingly direct ways. First, there’s the hardware side of crypto—nearly all major mining equipment manufacturers rely on Chinese components to build their rigs. When tariffs make these imports more expensive, it squeezes miners' profit margins, potentially forcing some operations offline and reducing Bitcoin's hash rate. This isn't just theoretical; during the 2019 trade war, Bitmain reportedly delayed shipments of new miners due to tariff uncertainties.

Most importantly, trade wars reshape global capital flows in ways that boost crypto's appeal. When traditional markets get shaky, we often see "risk-off" behavior where investors flock to alternatives. The fact that Bitcoin rallied while stocks dipped Monday suggests it's gaining credibility as a hedge—not unlike gold's historical role. As Commerce Secretary Lutnick navigates these choppy trade waters, crypto traders would be wise to watch for knock-on effects in liquidity, inflation expectations, and risk appetite.

With the next wave of China tariffs looming on June 1, Bitcoin finds itself at a fascinating crossroads. The coming weeks could validate or undermine its budding reputation as "digital gold." If negotiations stall and tariffs take full effect, watch for two countervailing forces: short-term sell pressure from risk-averse investors, versus long-term accumulation by those betting on currency debasement. 

The US Federal Reserve adds yet another layer of complexity. If trade tensions slow economic growth significantly, rate cuts could come back onto the table. This would likely weaken the dollar—historically a tailwind for Bitcoin—while also making risk assets more appealing. Crypto's correlation with tech stocks (which thrive in low-rate environments) might reassert itself after this week's gold-like behavior.

For retail traders, this means staying alert to both macroeconomic headlines and on-chain signals. Key metrics to track include exchange reserves (declining reserves often precede rallies), miner activity, and the stability of Tether's peg during market stress. One thing's certain: in a world where a Treasury Secretary's offhand comment can move markets 5% in an afternoon, crypto's next big swing might be just one trade policy tweet away.

How exciting!