The cryptocurrency market is on fire following the U.S. President Donald Trump’s recent decision to pause tariffs on Canada and Mexico. This move comes as the U.S. engages in critical discussions with its North American neighbors about border security and trade.
On February 3rd, Trump held phone calls with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum. The talks led to a temporary suspension of a 25% tariff for at least 30 days. This suspension is significant, as it eases market pressures and fosters a more stable trading environment.
Trudeau announced an ambitious border plan worth $1.3 billion. It includes appointing a fentanyl czar and improving border surveillance. Sheinbaum also confirmed similar agreements, focusing on security and trade. However, Trump warned in an interview with Bloomberg TV that tariffs could return, keeping negotiations tense.
China, facing a 10% tariff imposed on February 1st, has not received the same relief. The Wall Street Journal reports that China is eager to negotiate. The Chinese government has proposed reactivating the phase 1 trade agreement from 2020, which aimed to increase U.S. exports by $200 billion over two years.
The crypto market reacted swiftly to the tariff news. After a significant drop that wiped out about $10 billion in capital, Bitcoin surged past the crucial $100,000 mark, reaching $101,731. This is a remarkable recovery from its earlier low of $92,000. Ethereum also saw a strong rebound, climbing from $2,451 to $2,880.
Investor sentiment shifted dramatically. The Crypto Fear & Greed Index jumped into greed territory, scoring 72 out of 100, up from a previous score of 39 in fear territory. This change reflects a renewed optimism among investors as trade tensions ease.
Looking ahead, the prediction platform Polymarket estimates a 24% chance of completely removing tariffs on Mexico before March and 22% for Canada. In contrast, China stands at just 9% for potential tariff relief.
This rebound in the crypto market underscores the growing links between international trade policies and the behavior of digital assets. It highlights the sector’s sensitivity to geopolitical developments. Meanwhile, Europe is preparing a retaliatory plan against the tariffs imposed by Trump, signaling that the trade saga is far from over.
