China’s tariff moves slowed the crypto rebound, causing XRP and Dogecoin to surge 20% before dropping.

On Monday, Bitcoin and the broader equity markets saw a sharp decline following President Donald Trump’s announcement of new tariffs on imports from China, Mexico, and Canada. While the initial impact triggered a significant drop, cryptocurrencies quickly bounced back by as much as 20% in the following hours, as traders took advantage of a $2.2 billion market dip. However, this rally was short-lived as China retaliated with its own set of tariffs on U.S. goods.

As the Asian trading session unfolded, the momentum waned. The U.S. had missed the deadline to implement additional tariffs on China, which dampened investor sentiment further. Cryptos like XRP, dogecoin (DOGE), Solana (SOL), and Cardano (ADA) saw modest gains of about 3%, while Bitcoin (BTC) and ether (ETH) climbed by around 4%.

Ben El-Baz, Managing Director at HashKey Global, shared his thoughts in a Telegram message to CoinDesk, noting, “The escalating tariff tensions between the U.S. and China could reduce the appetite for risk assets, slowing down the bullish momentum that has been propelling the crypto market.” He added that “If the U.S. continues to roll out crypto-friendly policies, the effects of the tariffs may be short-term.”

Market participants remain divided about the long-term consequences of China’s retaliatory tariffs, with some predicting the tariffs could be a negotiating tactic that would eventually ease, similar to the deals made with Mexico and Canada. Others worry that this could escalate into a prolonged trade conflict.

Min Jung, research analyst at Prestro Research, explained, “Bitcoin is gaining recognition as digital gold, but it still behaves like a traditional risk asset, which means the U.S.-China tariff dispute is influencing crypto prices just like equities.”

Jung further commented, “While the initial market reaction may have been an overreaction, heightened volatility seems likely as investors assess what comes next. The critical question is whether this is part of a temporary negotiating strategy, or if it signals the start of a longer, more entrenched trade war with China, which has been a significant focal point for Trump.”

The market’s massive sell-off on Monday presented a “buy-the-dip” opportunity, as highlighted by a CoinDesk analysis. Traders shifted towards dollar-pegged stablecoins as a safeguard against market uncertainty. However, the possibility of further retaliatory tariffs from China and other countries could prolong market instability and keep crypto prices volatile in the coming days.