Bitcoin and other major cryptocurrencies rose on Tuesday amid a positive market reaction to US President Donald Trump's decision to postpone the introduction of new duties on Canada and Mexico. An additional factor in the growth was buying on the decline.
Writes UNN with reference to Investing.
By 01:05 EDT (06:05 GMT), bitcoin had added 5.6% to reach $99,327.5.
After the announcement of the postponement of the duties, its price rose above $100,000 on Monday evening. The initially announced imposition of a 25% duty on Canadian and Mexican imports and a 10% duty on Chinese goods caused a significant sell-off in risky assets, which led to a sharp drop in the value of bitcoin and other digital currencies. Investors tried to cash out their assets.
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However, on Tuesday night, Trump agreed to postpone the introduction of duties for 30 days. Prior to that, bitcoin dropped to $91,695.8, while Ethereum lost more than 20%, reaching $2,261.27. However, on Tuesday, Ethereum grew by 7.6%, rising to $2,704.1.
The cryptocurrency market has traditionally responded to macroeconomic uncertainty as traders seek liquidity in times of market stress. Thanks to round-the-clock trading, cryptocurrencies remain an affordable tool for quick asset adjustments, especially on weekends when traditional financial markets are closed.
With the immediate threat of trade barriers diminished, investors returned to buying, which helped stabilize the crypto market. At the same time, analysts warn of its vulnerability to geopolitical events.
If duties are imposed on Chinese imports or new trade restrictions are introduced, this could slow the growth of cryptocurrencies.
Most altcoins returned to growth after falling by about 20% during the previous session. XRP, the third largest cryptocurrency by capitalization, added 13% to reach $2.5897. Solana was up 5.1%, Polygon by 7.8%, and Cardano by 10.4%.
Among the meme coins, Dogecoin jumped 11.4%, while $TRUMP, a Trump-related meme token, fell 1.3% to end at $17,603 after hitting a record low of $16,349 on Monday.
Recall
At the beginning of the week, the cryptocurrency market suffered significant losses, with bitcoin falling to its lowest level in three weeks. Investors reacted to the growing risk of a trade war, which led to a massive sell-off in financial markets.