A Swift Market Recovery
On February 3, 2025, crypto markets experienced a sharp rebound, buoyed by an unexpected announcement from US President Donald Trump. After a phone call with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum, Trump agreed to temporarily halt proposed tariffs on both countries, sending a wave of optimism through the market. This move seems to have calmed fears of an all-out trade war and sparked a surge in both Bitcoin and altcoin prices. Let’s unpack the details behind this market turnaround.
The Tariff Pause: A Game-Changer for Trade and Crypto
The initial announcement of tariffs by the US on goods from Mexico and Canada had sent shockwaves through the global economy, with markets bracing for possible disruptions. But thanks to a phone call between Trump and the leaders of Canada and Mexico, things took a dramatic turn.
In a tweet on February 3, Trudeau confirmed that the proposed 25% tariffs would be paused for at least 30 days. This temporary break came with an important commitment from Canada: they would roll out a $1.3 billion border plan to combat illegal immigration and drug trafficking. This included a Fentanyl czar, a list of cartels designated as terrorist groups, and more resources on the US-Canada border, including helicopters and personnel. It was clear that both nations were working towards a solution that would benefit all sides.
Mexico’s President Sheinbaum also chimed in with her own statement, confirming that the tariffs would be paused for one month as the two countries began focusing on two crucial areas: security and trade. Sheinbaum remarked that “teams will begin working today” to tackle these challenges head-on, creating a path forward without the looming threat of economic punishment. However, in a Bloomberg interview, Trump made it clear that the situation was still fluid, and tariffs could still be implemented in the future.
Crypto Prices Surge: Bitcoin Crosses $100k
The tariff pause didn’t just calm political tensions—it also reignited bullish sentiment in the cryptocurrency markets. Bitcoin, which had recently dropped to a low of $92,000, quickly surged past the $100,000 mark, reaching $101,731. This sharp increase came after the announcement of the tariff delay and signaled renewed optimism in the space.
Ethereum also saw a significant rebound. After dipping to $2,451 on February 2, Ether climbed back up to $2,880, reflecting a broader recovery in the altcoin market. But the story didn’t stop with price movements—crypto sentiment also shifted dramatically. The Crypto Fear & Greed Index, which gauges overall market mood, spiked into “greed” territory with a score of 72 out of 100, compared to its previous reading in the “fear” zone.
Analysts Weigh In: Could This Be the Start of Something Big?
Market experts have weighed in on the implications of these developments, with many predicting that this rebound could set the stage for new all-time highs in the crypto market.
Pav Hundal, lead market analyst at Swyftx, suggests that the tariff pause has relieved much of the uncertainty that had been plaguing investors. He believes that this could lead to a “complete recovery” for many digital assets. Hundal even hints that if the threat of tariffs continues to fade, Bitcoin and other cryptocurrencies could be primed for major gains in the near future.
“If the shadow of tariffs continues to recede…all you’re really left with is good news and economic data that you can at least hedge against,” Hundal explained. “I like Bitcoin’s chances of hitting new all-time highs very quickly in a world where the tariff threat is low, and the US policy environment is so accommodating.”
A Positive Shift: Trump’s Executive Order and the Sovereign Wealth Fund
While the tariff pause is certainly good news, other developments are also encouraging for the digital asset space. Trump’s recent Executive Order to create a US sovereign wealth fund—aimed at boosting economic growth and strategic investments—has some industry experts excited about the future of crypto. Sean Dawson, head of research at decentralized protocol Derive.xyz, believes that this could signal bullish sentiment for cryptocurrencies.
“Trump’s Executive Order to establish a sovereign wealth fund could indicate positive market trends for digital assets,” Dawson said. “This is especially relevant given that Commerce Secretary nominee Howard Lutnick has been a strong advocate for the industry.”
What Happens If Tariffs Resurface?
While the market’s reaction has been largely positive, some analysts caution that the threat of tariffs is far from over. Earlier in the week, Trump had announced new tariffs on Chinese, Mexican, and Canadian goods, which led to a significant sell-off in the markets. It was estimated that as much as $10 billion in capital was liquidated in the aftermath, causing a brief dip in crypto prices.
However, not all market participants agree on the long-term impact of these tariffs. Chris Chung, founder of Solana swap platform Titan, believes that the market’s response to the tariff threat was an overreaction. He pointed out that digital transactions, including cryptocurrency, are not subject to tariffs. In the grand scheme of things, he argued, the tariff news had little direct impact on the crypto market.
Looking ahead, Chung sees the potential for tariffs to drive more capital into digital assets as people in affected countries seek refuge in USD-denominated stablecoins and crypto. “As people’s home currencies, like the Canadian dollar, plummet against the US dollar, we will see more inflows into both USD-denominated stablecoins and crypto assets like Bitcoin,” Chung explained. “If the tariffs cause inflation, as many fear they will, then even US investors will seek refuge in cryptocurrency.”
Crypto’s Resilience in a Changing World
The latest developments in global trade policy have once again demonstrated the resilience of the cryptocurrency market. After a brief dip, Bitcoin and other digital assets have quickly regained momentum, bolstered by positive news surrounding the US tariff pause on Canada and Mexico. With analysts predicting more gains on the horizon, the crypto space remains in an exciting period of recovery—and perhaps even growth.
Whether it’s the ongoing trade talks, Trump’s executive orders, or just the market’s ability to bounce back from uncertainty, the message is clear: crypto has proven its ability to weather the storm. And if the tariff threats continue to recede, 2025 could be the year of crypto’s big breakout.
