XRP and Dogecoin Surged 20%, Then Dipped as China Tariffs Dent Crypto Rebound

China's Tariff Retaliation Impacts Cryptocurrency Markets

Over the past 24 hours, major cryptocurrencies experienced a surge of up to 20%, before pulling back. This followed a buy-the-dip strategy after Monday's $2.2 billion loss, but gains were erased upon China's announcement of retaliatory tariffs on the U.S.

During Asian morning hours, the rally subsided as the deadline for the U.S. to impose additional tariffs on China passed without resolution.

Several cryptocurrencies witnessed gains, including XRP, dogecoin (DOGE), Solana's SOL, and Cardano's ADA, all up around 3%. Bitcoin (BTC) and ether (ETH) gained approximately 4%.

However, Ben El-Baz, Managing Director of HashKey Global, cautions that the U.S.-China tariff conflict could dampen risk appetite and curb the positive sentiment that has fueled the cryptocurrency market's upswing over the past year. He adds that this damage could be mitigated if the U.S. enacts crypto-friendly policies.

Traders remain divided on the long-term implications of China's retaliatory measures, with markets influenced by the potential for reversal or extended correction if further actions are taken by Trump's administration.

According to Min Jung, Research Analyst at Prestro Research, "Despite increased recognition of Bitcoin as digital gold, it still largely trades like a risk asset." This makes it vulnerable to the pressure caused by China's tariffs, similar to other global risk assets like equities.

Jung adds that while today's initial reaction may have been exaggerated, heightened volatility is expected to continue as markets react to further developments. "The crucial question is whether this move is primarily a negotiation tactic that could eventually be reversed or signals the start of a prolonged trade conflict," she says.

President Trump's earlier decision to impose tariffs on imports from Canada, Mexico, and China caused a sharp drop in bitcoin and equity markets. This shifted investors' focus from Trump's pro-crypto stance to the immediate economic consequences.

Monday's liquidation event presented a "buy-the-dip" opportunity, with investors seeking protection against economic uncertainty and currency volatility through dollar-backed stablecoins.

Nonetheless, China's retaliatory tariffs could spark a broader trade war and intensify volatility across the cryptocurrency market in the coming days.