Latest U.S. Tariff Moves Briefly Stalling Crypto's Bullish Momentum

The cryptocurrency market has taken a slight breather ever since President Trump reignited (then paused) trade tensions with the European Union. After a new Bitcoin all-time high of $112K was briefly celebrated, Bitcoin and most altcoins have moved sideways, giving back some of their gains in response to the uncertainty. Trump’s unexpected announcement of a 50% tariff on EU goods, followed by a quick pause (two days later) until July 9th, has left traders second-guessing the near-term direction of markets.

Less than a day after media outlets (and retail traders) were celebrating Bitcoin's newly established all-time high, surpassing the previous ~$109K level back on Trump's January 20th inauguration day, the party appeared to be ruined. The tariffs immediately caused about a ~4% drop, with most altcoins getting hit much harder.

On Santiment, we saw how the major increase in tariff talks was correlating with the market-wide downswing. This was the biggest jump in the topic since the major capitulation (and perfect time to buy) occurred between April 7th and 9th.

While the pullback was mild compared to past trade-related disruptions, the shift in sentiment was noticeable. First, there was genuine concern that we were going to see another major market dump similar to what we saw in the first week of April.

Trump stated that the EU had been “very difficult to deal with” and that talks were “going nowhere.” European equities dropped, the euro weakened, and U.S. futures turned red. Even crypto, which doesn’t always react to traditional headlines, saw a dip in bullish activity. Traders quickly pulled back on aggressive altcoin positions, with social sentiment shifting toward caution, particularly among retail investors.

But after the pause until July 9th was announced, positivity and bullish narratives quickly returned to the table from crypto traders.

This kind of back-and-forth has become a familiar pattern for traders. Over the past seven weeks, Trump’s trade war moves (whether they be negotiation tactics or complete bluffs) have often followed a similar rhythm: announce a threat, stir up headlines, then offer a short-term fix that avoids immediate conflict. While this approach can work as a negotiating tactic, it tends to keep markets on edge. For investors in crypto, where volatility is already baked into the landscape, this adds another layer of unpredictability. It's hard to deny that digital assets are way more intertwined with global macro trends than they were a decade ago, back when crypto felt like a true free-for-all. And many, like Peter Schiff, have been vocal about what they believe is actually going on:

For crypto traders paying attention to broader narratives, this situation highlights how sensitive the space has become to traditional policy shifts. When tariffs are introduced or even threatened, they can signal inflation risk, supply chain disruptions, or a shift in consumer spending. These are all factors that affect both equity and crypto markets. Bitcoin may still be seen by some as a hedge against economic instability, but in practice, it often behaves more like a high-risk tech stock when headlines shake investor confidence.

But perhaps these tariff announcements begin to have less and less of an effect over time. After all, this time around, we didn't see nearly the level of shock-waves over the brief two-day stretch before the July 9th delay was announced. Is Trump waiting to see how the crowd reacts before deciding when (or if) to pause the tariffs at all? It's possible. But the reality is that none of us are in his close circle. And only a select few know about the strategy behind these timings.

There may be just be a clear argument that following is one of the few reliable indicators right now. Markets historically tend to move the opposite direction of retrail traders' expectations. So when they were euphoric following the May 22nd all-time high, that was likely a good time to take profit regardless of these tariffs. And when they were showing peak fear about the tariffs when they were announced a day later, you would have done quite well to buy as others were abandoning their BTC and altcoins.

Looking ahead, the July 9 deadline now becomes a key date to watch. If no deal is reached, the 50% tariff could still be implemented, potentially dragging down sentiment across financial markets. The EU has already warned that it may respond with countermeasures, and such a scenario would likely increase short-term volatility. And don't forget the 90-day pause on China tariffs that were announced just over two weeks ago, as an added layer of stress if we actually get close to that early August deadline.

With Bitcoin holding steady and altcoins searching for direction, patience and perspective are key. As negotiations between the U.S. and seemingly everyone else unflod, crypto’s response is probably going to be mirroring how stock traders are reacting as well. So expect them to stay in close correlation. They are similarly calm for now, but have the potential to shift quickly on any further news that could blindside the entire world at any time. The U.S. markets were on holiday for Memorial Day, but expect them to open in the green later today, marking a delayed reaction to Trump's pause just before markets closed on Friday. And that means crypto will likely see a slight boost as a result.

While crypto might benefit in the long run from instability in traditional finance, sudden shocks tend to push traders into more cautious positions, at least in the immediate aftermath. For now, traders should stay informed and avoid overreacting to every twist in the story. Markets often move less on the news itself and more on how people expect others to react.

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Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.