- Bitcoin showed strength, trading above $84,000 on Wednesday as the US-China trade war heats up.
- The US announced that China faces a total tariff of 245% on imports after its retaliatory actions over the weekend.
- China has also reportedly sold much of its seized cryptocurrencies due to an economic slowdown amid the global trade war.
Bitcoin (BTC) witnessed little pressure on Wednesday despite the Chinese government selling off parts of its confiscated cryptocurrency holdings. The action follows a recent statement from the White House revealing that China could face up to 245% tariffs on exports to the US due to its retaliatory actions over the weekend.
Bitcoin holds $84,000 as US-China tariff face-off continues
Bitcoin held the $84,000 level on Wednesday amid rising volatility across the financial markets due to heightened trade war tensions between the US and China.
The US government announced that China faces up to 245% tariffs, including 125% reciprocal tariffs, a 20% tariff to address the fentanyl crisis, and Section 301 tariffs on specific goods between 7.5% and 100%. The action came in response to China’s retaliatory actions, including an increase of its tariff on US goods to 125% over the weekend.
The news sparked losses across major stocks, with the S&P 500 and Nasdaq-100 dropping 2.24% and 3.04%, respectively. Bitcoin’s resilience amid the news shows signs of a decoupling from traditional stocks.
In a note shared with FXStreet, Messari analyst Dylan Bane stated a long-term tariff environment could lead to Bitcoin decoupling from stocks.
“Continued tariffs could catalyze structural economic change, leading to a decoupling of Bitcoin from traditional assets as it gains recognition as an independent store of value,” Bane stated.
He emphasized the tariffs’ impact on the global economic order, disrupting global trade cooperation and thereby hurting the US Dollar’s world reserve status. As a result, sustained economic declines could shift Bitcoin’s role from a tradable asset to a long-term store of value.
“The broader economic uncertainty and institutional distrust that come with such a shift could also drive greater interest in crypto more broadly as a financial infrastructure not reliant on any single government or monetary authority,” Bane added.
Meanwhile, China reportedly began selling off its seized crypto holdings following an economic drawback, according to Reuters. The report stated that local governments in China used private firms to sell seized crypto overseas for cash, helping fund public budgets.
To create a structured process for handling its confiscated cryptocurrencies, Reuters noted that a few experts suggested that China employ Trump’s approach by creating a strategic Bitcoin reserve. Chinese local governments reportedly held 15,000 BTC as of December 2024.
