Bitcoin and Ethereum are making headlines with a remarkable rebound following a brutal sell-off. In light of recent developments regarding tariffs on Canada and Mexico, market optimism is building—could this rally sustain momentum?
The cryptocurrency market has demonstrated a strong resurgence after substantial declines prompted by new tariff announcements.
Bitcoin (BTC), Ethereum (ETH), and the wider digital asset landscape experienced significant losses after the U.S. government announced tariffs on Canada, Mexico, and China. However, a temporary pause on these trade restrictions for Canada and Mexico has ignited a wave of optimism.
Following a sharp decline to $91,200 on February 3, Bitcoin has rebounded strongly, now trading around $101,000—a 7% increase over the last 24 hours, yet still down nearly 2% over the past week.
Ethereum has shown even greater resilience, climbing nearly 10% in the last 24 hours to reach $2,800 after dropping to $2,460. However, it remains 12% lower compared to last week.
The overall cryptocurrency market capitalization surged by 8.5% in the past day, reaching $3.43 trillion, reflecting a renewed investor interest.
Investor sentiment has shifted positively as the Crypto Fear & Greed Index rose to 72, indicating a transition into “greed” after previously hitting a low of 44 during the market downturn.
Market Tensions and Recovery
The sell-off began when tariffs were introduced on February 3, creating shockwaves across financial markets, including cryptocurrencies.
The U.S. imposed a 10% tariff on China, while Canada and Mexico faced higher duties of 25%. This announcement triggered immediate uncertainty, deeply affecting risk assets, including the crypto market.
However, shortly after the tariffs were announced, diplomatic discussions commenced. The Prime Minister of Canada confirmed that a temporary 30-day pause had been secured while both nations sought a broader border security agreement.
The agreement entails a $1.3 billion security plan and increased border enforcement to address issues including drug trafficking.
Mexico has also agreed to a temporary halt on the tariffs as both countries collaborate on strengthening border protocols.
Despite these temporary alleviations, uncertainty lingers. Statements from U.S. officials indicate that negotiations are ongoing, leaving the prospect of future tariffs open.
In contrast, China remains excluded from any tariff pause but is reportedly open to negotiation according to recent reports.
AI, Global Markets, and Crypto Volatility
While the latest tariff situation triggered substantial market volatility, the crypto market was already under pressure due to other factors.
The recent release of a powerful artificial intelligence model by a non-U.S. firm raised alarms regarding global tech competition, further impacting market stability.
As traders continue to react to these unfolding scenarios, the cryptocurrency market remains on high alert. While a pause in tariffs offers temporary relief, the possibility of renewed conflict or geopolitical tensions may reignite volatility.
