Crypto Roars Back as Markets Cheer Trump's Tariff Pause

Cryptocurrency markets staged a significant rebound on Wednesday, mirroring a powerful surge in traditional equities after U.S. President Donald Trump announced a 90-day pause on reciprocal tariffs for countries that do not retaliate.

The global crypto market capitalization jumped by 8.13% over the last 24 hours, reaching $2.61 trillion, recovering much of the losses incurred earlier in the week due to trade war anxieties.

Major cryptocurrencies experienced significant gains following the tariff pause announcement, with Bitcoin surging by over 8% to $82,471, Ethereum climbing by more than 13.88% to $1,641, and Solana rallying by over 11.9% to $117.38 in the last 24 hours.

The dramatic market shift followed Trump's unexpected announcement of a temporary reprieve on tariffs, setting a 10% rate for non-retaliating nations during this 90-day window. This move sparked a wave of optimism across financial markets, despite China's earlier confirmation of imposing additional tariffs of 84% on U.S. goods, effective today. However, President Trump said the U.S. would hike tariffs on China to 125%, up from 104% before China's retaliation.

The S&P 500 responded with its largest single-day gain since October 2008, soaring by 9.52%, while the Nasdaq Composite surged by 12.16%, marking its second-largest daily increase on record. Mega-cap tech stocks like Apple, Nvidia, Microsoft, Amazon, Tesla, and Meta all witnessed gains of at least 10%, fueling the market rally.

Treasury Secretary Scott Bessent shed light on the rationale behind the sudden shift in tariff policy, saying that the pause "gives time to negotiate" and is "not because of the market's reaction." He also suggested that this was Trump's intended strategy, claiming, "This was Trump's strategy all along, you might even say he goaded China into a bad position. He told me the strategy on Sunday."

President Trump himself commented on the market's explosive reaction, stating, "Up 2500 points. Nobody has ever heard of it. Gotta be a record." He also acknowledged the market's earlier apprehension, saying , "I put a pause on Tariffs because people were jumping out of line; They were getting a little bit yipee. Little bit afraid. I have reversed tariffs for a short period of time."

Despite the jubilant market response, Trump cautioned that the situation was not entirely resolved. "Nothing's over yet but countries want to make deals; a deal could be made with everyone," but said "It has to be fair for US." He also hinted at potential exemptions for some U.S. companies and emphasized his reliance on instinct in such decisions, noting, "I am using instinct on such decisions, you have to have flexibility." Regarding the bond market, Trump commented, "I was watching the bond market. The bond market is very tricky. I was watching it, but if you look at it now, it’s beautiful. But, I saw last night where people were getting a little queasy."

A White House official clarified that the 90-day tariff pause does not apply to existing tariffs on Canada and Mexico under the USMCA agreement, with a 25% tariff on non-USMCA trade with these nations remaining in effect, except for a 10% tariff on energy and potash. Tariffs on steel, aluminum, and autos will also remain unchanged.

Despite the current reprieve, he also indicated that "sectoral tariffs" were still forthcoming and specifically mentioned potential tariffs on pharmaceutical companies. However, regarding further increases on tariffs against China, Trump stated, "I 'can't imagine' further increase of tariffs on China... I don't think we'll have to do it more. We, you know, we calculated it very carefully.”

While the 90-day window offers a temporary respite and a chance for negotiations, President Trump's statements suggest that the underlying trade tensions and the potential for future tariffs will remain a key factor influencing investor sentiment and market volatility.