The cryptocurrency markets experienced a sharp rebound following US President Donald Trump’s decision to temporarily hold off on proposed tariffs against Canada and Mexico. This move came after a productive phone call between Trump and Canadian Prime Minister Justin Trudeau, as well as Mexican President Claudia Sheinbaum.
On February 3, Trudeau announced on X that the 25% tariffs would be paused for at least 30 days, allowing both nations to collaborate on critical issues. He emphasized Canada’s commitment to enhancing border security, including a $1.3 billion plan that involves appointing a Fentanyl czar, labeling drug cartels as terrorists, and boosting resources at the US-Canada border.
Mexico’s tariffs are similarly on hold, as Sheinbaum confirmed that both leaders had reached agreements aimed at fortifying their shared border. “Our teams will begin working today on two fronts: security and trade,” she stated, highlighting a cooperative spirit.
Despite the positive developments, Trump clarified in a Bloomberg TV interview that tariffs have not been fully agreed upon and could still be implemented. This uncertainty had previously rattled markets.
Crypto Prices Climb
Amid the political backdrop, cryptocurrencies surged. Bitcoin, which had dipped to $92,000, soared to over $101,000. Ether also rebounded, climbing from $2,451 to $2,880. The Crypto Fear & Greed Index reflected this optimism, jumping to a score of 72, indicating a shift from fear to greed among investors.
Market analyst Pav Hundal from Swyftx noted that the pause on tariffs has created a wave of relief among investors. “This could pave a path to new all-time highs,” he remarked. Investors are now focused on positive economic indicators rather than tariff threats.
Sean Dawson, head of research at Derive.xyzCrypto Markets Bounce Back as Trump Pauses Canada and Mexico Tariffs
In a surprising turn of events, the crypto markets have rebounded sharply after US President Donald Trump agreed to put a temporary hold on proposed tariffs aimed at Canada and Mexico. The move comes as the two countries have agreed to implement policies to address the flow of illegal drugs and immigration into the US.
Following a phone call with Canadian Prime Minister Justin Trudeau, Trump announced that the 25% tariffs would be paused for at least 30 days. Trudeau stated that Canada would be enhancing “coordination with our American partners” by implementing a $1.3 billion border plan, including appointing a Fentanyl czar, listing cartels as terrorists, and reinforcing the US-Canada border with helicopters and more personnel.
Similarly, Mexico’s tariffs have also been paused for a month. Mexican President Claudia Sheinbaum said the two leaders had “reached a series of agreements,” with a similar promise of reinforcing the land border shared between the two countries.
The news has had a significant impact on the crypto market. Bitcoin has crossed the $100,000 threshold, reaching $101,731, after hitting a low of $92,000 the day before. Ethereum has also performed better, climbing back to $2,880 from a low of $2,451.
Pav Hundal, lead market analyst at crypto exchange Swyftx, believes the recent developments could pave the way for new all-time highs. He says the pause on tariffs has left investors “somewhere between relieved and cheerful, leading to a complete recovery in many digital assets.”
Sean Dawson, head of research at decentralized protocol Derive.xyz, also sees potential for a recovery, particularly after the pause on tariffs and the executive order directing the US government to create a sovereign wealth fund.
“Trump’s Executive Order to establish a sovereign wealth fund under the Treasury and Commerce departments could signal bullish sentiment for the digital asset space,” Dawson said.
The crypto markets had plummeted the day before, with estimates suggesting up to $10 billion worth of capital was liquidated, after Trump announced potential tariffs on goods from China, Mexico, and Canada. However, Chris Chung, founder of Solana swap platform Titan, believes the market’s reaction was an overreaction, as “digital transactions aren’t tariffed.”
In the long run, Chung expects the tariffs to attract more inflows into digital assets, as people seek refuge in USD-denominated stablecoins and cryptocurrencies like Bitcoin and altcoins.
Overall, the pause on tariffs has provided a much-needed boost to the crypto markets, and investors are hopeful that this could be the start of a sustained recovery.
