Crypto Crash: XRP and Dogecoin Plummet as China Strikes Back with Tariffs

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What’s the tea?

  • XRP and Dogecoin take a nosedive after China announces tariffs on the U.S.
  • Crypto traders are divided on the long-term impact of China’s retaliation.

Crypto majors soared up to 20%, only to crash back down in the past 24 hours as traders embraced a “buy-the-dip” strategy following Monday’s $2.2 billion profit turn. However, gains were quickly wiped out as China announced retaliatory tariffs on the U.S.

The bump saw a pullback during the Asian morning hours as the deadline for the U.S. to impose additional tariffs on China passed without an agreement.

XRP, dogecoin (DOGE), Solana’s SOL, and Cardano‘s ADA are up nearly 3%. Bitcoin (BTC) and ether (ETH) are nearly 4% higher.

“The U.S.-China tariff conflict could decrease the appetite for risk assets and further impact the positive sentiment that has been fueling a bull market in the crypto industry over the past year,” Ben El-Baz, Managing Director of HashKey Global, told CoinDesk in a Telegram message. “The damage from the tariffs could still be made temporary if more crypto-friendly policies in the U.S. are set in motion,” El-Baz added.

Traders remain mixed on the long-term impact of China’s retaliatory decisions, however, with markets hinging on the chance of a reversal or a prolonged drawdown if further actions against the country happen under Trump.

“Despite more people considering Bitcoin as digital gold, it still largely trades like a risk asset,” Min Jung, research analyst at Prestro Research, told CoinDesk in a Telegram chat. “As a result, China’s retaliatory 10% tariff on the U.S. is pressuring crypto, much like other global risk assets such as equities.”

“While today’s initial reaction may have been an overreaction, heightened volatility is likely to persist as markets digest further developments. The key question now is whether this move is primarily a negotiation tactic that could eventually be reversed—similar to what we saw with Canada and Mexico—or if it signals the start of a prolonged trade conflict, given that China has been a central focus of Trump’s rhetoric,” Jung said.

Donald Trump’s decision to impose tariffs on imports from Canada, Mexico, and China led to a steep drop in bitcoin and broader equity markets on Monday, turning investors’ focus from Trump’s pro-crypto stance to immediate economic repercussions.

Monday’s major liquidation event offered a “buy-the-dip” opportunity to traders, as a CoinDesk analysis noted, with the tariff announcements sparking interest in dollar-backed stablecoins as a hedge against economic uncertainty and currency volatility.

However, the imposition of tariffs could lead to retaliatory measures from affected countries, potentially sparking a broader trade war and leading to further volatility across the crypto market in the days to come.

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2025-02-04 11:12