Under the Shadow of Trade Wars: A Risk-Averse Approach to Capital Amidst Market Volatility and Observation of Cryptocurrency Prices

Market Tremors: Tariff Storm Triggers Double Kill in Stocks and Currencies, Crypto Market Also Corrects

Trump administration announced reciprocal tariffs last week, causing severe fluctuations in global financial markets | Source: Trump on Truth Social
On April 2, U.S. President Trump announced the initiation of a “reciprocal tariff” policy, imposing a basic tariff of 10% on approximately 90 trading partners, with higher rates for certain countries: the overall average tariff on Chinese goods rose to 54%, 32% for Taiwan, 24% for Japan, and 25% for both Canada and Singapore. This move heightened global trade tensions.
Countries began to express their reactions: Canada and Singapore expressed regret and sought negotiations, while Japan and Taiwan stated they reserved the right to file a WTO dispute resolution. On April 4, China responded firmly, announcing a comprehensive 34% retaliatory tariff on U.S. goods and suspending certain energy and agricultural procurement agreements, officially igniting the bilateral trade war, leading to a pessimistic outlook for the global economy.
The market reacted sharply. From April 4 to April 7, global stock markets experienced continuous crashes, with Taiwan’s stock market plunging 2,065 points in a single day, setting a historical record. The Dow Jones Industrial Average opened with a drop of over a thousand points, and technology and semiconductor sectors were heavily impacted. The cryptocurrency market also suffered, with Bitcoin’s price plunging to $74,436, reflecting a continued risk-averse sentiment among investors as funds fled risk assets.
On April 9, Trump unexpectedly announced a 90-day suspension of tariff measures for most countries, but further escalated trade pressure on China by announcing an additional 50% tariff on all imports from China, bringing the cumulative tariff rate to 104%. Subsequently, China announced that starting April 10, the tariff rate on all imported goods from the U.S. would increase from 34% to 84%.
On the same day, Trump stated that due to China’s “lack of respect” for the global market, he decided to immediately raise tariffs on China to 125%, emphasizing that China’s exploitation of the U.S. and other countries would no longer be tolerated. This continuous series of actions escalated U.S.-China trade tensions once again.

On-Chain and Technical Observations: Activity Declines, Sideways Trend Continues

Bitcoin price dipped below $75,000 twice this week, rebounding this morning as Trump’s policy shifted | Source: CoinMarketCap
The Fear and Greed Index dropped to 27.8 in early April and further decreased to 18 on April 9, indicating a shift to extreme fear in market sentiment, reflecting investors’ high sensitivity to policy and macroeconomic conditions. Overall confidence has not yet recovered to a neutral to bullish level. The stock of Bitcoin and Ethereum on exchanges slightly rebounded, but the number of on-chain transactions, average fees, and active addresses all declined, indicating that market participation remains low.
According to CryptoQuant data, the number of active Bitcoin addresses fell to 890,000 in early April, a three-month low, and the average on-chain transaction fee remained below $1.2 for three consecutive days, showing weak trading momentum.
In terms of price, Bitcoin fell to $74,000 following the trade war escalation and bearish market sentiment after April 2, but rebounded to around $78,000 after Trump’s announcement of the tariff suspension on April 9, as short-term capital replenished. Overall, it exhibited a high-range consolidation pattern. Ethereum’s price continued to weaken in early April, dropping to around $1,470 on April 9, marking a nearly two-year low. It then rebounded above $1,600 due to market recovery and short-term capital inflow, yet the overall trend still lacks a clear reversal structure.

Unclear Macro Environment: High Inflation, Tight Employment, Liquidity Difficult to Shift to Bullish

Recent economic data shows that the U.S. labor market remains resilient. According to the non-farm employment report released on April 5 for March, the number of new jobs added reached 303,000, significantly higher than the market expectation of 214,000, while the unemployment rate held steady at 3.8%. This data strengthens the likelihood that the Federal Reserve will maintain high-interest rate policies in the short term, further delaying market expectations for interest rate cuts.
On the inflation front, initial jobless claims for the most recent week were slightly lower than expected, indicating that the risk of economic overheating has not yet been resolved, which suppresses the risk appetite for market funds.
On the other hand, Arthur Hayes, founder of BitMEX, has been releasing market comments this month as the policy shifts, indicating that amid the escalating U.S.-China trade war and increasing market volatility, the U.S. government may face substantial funding pressures, potentially forcing the Federal Reserve to end its quantitative tightening policies early. He believes that if quantitative easing (QE) is further initiated and the supplementary leverage ratio (SLR) requirements for banks are relaxed, it could release liquidity and trigger a “fiat currency flood” period.
He predicts that such a policy shift would benefit the price performance of assets like Bitcoin, even suggesting a high forecast of “Bitcoin potentially reaching $250,000 in this financial cycle.” However, he also warns that before a new round of capital activation, the market may still experience short-term volatility and severe corrections, advising investors to remain flexible and keep funds ready for turning points.

Correction Phase Amid Increased Volatility and Confused Expectations

From policy trends, macro data to market structure, the recent challenges facing the cryptocurrency market primarily stem from three aspects: first, the repeated policy signals make it difficult for the market to establish stable expectations; second, the lack of capital momentum has not yet formed an overall recovery in risk appetite; third, on-chain and technical aspects still show weakness, lacking clear signs of trend strengthening.
In the short term, investors may continue to focus on three key points: (1) whether U.S.-China trade policies will experience a reversal again; (2) whether inflation and interest rate policy expectations stabilize; (3) whether on-chain capital and active participation improve in sync. In the context of intertwined macro risks and structural stagnation, the market is likely to maintain high volatility and a lack of clear direction in the short term; conservative operations and patient waiting will be important strategies at this stage.

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