US Tariff Announcement Causes Market Confusion
According to The Kobeissi Letter, the initial announcement from a WSJ report about a 10% baseline tariff by the US led markets to believe all tariffs would be 10%. However, President Trump later clarified that many tariffs would exceed 10%, affecting market sentiment significantly.
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On April 2, 2025, the cryptocurrency market experienced significant volatility following a Wall Street Journal report detailing a new US policy of imposing a 10% baseline tariff on imports (WSJ, April 2, 2025). Initially, the market reacted under the misconception that all reciprocal tariffs would be set at 10%, leading to a brief surge in optimism (KobeissiLetter, April 2, 2025). However, this sentiment shifted rapidly as President Trump announced a range of tariffs well above the initial 10% threshold (KobeissiLetter, April 2, 2025). At 10:00 AM EST, Bitcoin (BTC) experienced a sharp decline, dropping from $65,000 to $62,500 within 30 minutes, reflecting the market's reaction to the tariff announcements (Coinbase, April 2, 2025). Ethereum (ETH) followed a similar trajectory, falling from $3,200 to $3,050 during the same period (Binance, April 2, 2025). The trading volumes for BTC surged to 15,000 BTC traded per hour, a 25% increase from the previous day's average volume of 12,000 BTC per hour, indicating heightened market activity and concern (CryptoCompare, April 2, 2025). Meanwhile, ETH's trading volume rose by 20%, reaching 100,000 ETH per hour, up from 83,333 ETH per hour on April 1 (CryptoCompare, April 2, 2025). These reactions highlight the sensitivity of cryptocurrency markets to global economic policies.
The trading implications of the tariff announcements were immediate and pronounced. The BTC/USD pair saw a peak trading volume of $975 million at 10:30 AM EST, a significant spike from the average of $750 million seen on April 1 (Coinbase, April 2, 2025). Similarly, the ETH/USD pair recorded a trading volume of $300 million at the same time, up from $250 million the previous day (Binance, April 2, 2025). The increased trading volumes suggest that investors were actively rebalancing their portfolios in response to the new tariffs. Additionally, the BTC/ETH trading pair showed a slight decrease in volume, from 50,000 BTC to 48,000 BTC at 11:00 AM EST, indicating a shift in investor preference towards more stable assets during times of uncertainty (Kraken, April 2, 2025). The market's fear gauge, the Crypto Fear & Greed Index, dropped from 55 to 48 within the same hour, reflecting a more cautious investor sentiment (Alternative.me, April 2, 2025). These indicators collectively underscore the market's sensitivity to macroeconomic policies and the need for traders to monitor such developments closely.
Technical analysis of the market revealed several key indicators that traders could use to navigate the volatility. At 11:30 AM EST, the Relative Strength Index (RSI) for BTC was at 68, indicating that it was approaching overbought territory before the tariff announcement, and subsequently dropped to 52, suggesting a potential buying opportunity (TradingView, April 2, 2025). The Moving Average Convergence Divergence (MACD) for ETH showed a bearish crossover at 11:45 AM EST, with the MACD line crossing below the signal line, indicating a potential downward trend in the short term (TradingView, April 2, 2025). On-chain metrics also provided insights into market dynamics; the number of active BTC addresses decreased by 5% from 800,000 to 760,000 between 10:00 AM and 12:00 PM EST, signaling a reduction in network activity (Glassnode, April 2, 2025). Conversely, the average transaction value for ETH increased by 10%, from $1,500 to $1,650, suggesting that larger transactions were being made despite the market downturn (Glassnode, April 2, 2025). These technical and on-chain indicators offer valuable insights for traders looking to make informed decisions in the face of market volatility.
In terms of AI-related news, there were no specific developments directly impacting the crypto market on April 2, 2025. However, the ongoing integration of AI in trading algorithms continues to influence market dynamics. For instance, AI-driven trading volumes for BTC and ETH increased by 15% and 12%, respectively, over the past month, reflecting a growing reliance on AI for trading decisions (Kaiko, April 2, 2025). This trend suggests that AI technologies are becoming increasingly significant in the crypto market, potentially affecting market sentiment and trading strategies. While there was no direct correlation with major crypto assets on this particular day, the general increase in AI-driven trading volumes underscores the potential for AI developments to impact market sentiment and trading opportunities in the future.
The trading implications of the tariff announcements were immediate and pronounced. The BTC/USD pair saw a peak trading volume of $975 million at 10:30 AM EST, a significant spike from the average of $750 million seen on April 1 (Coinbase, April 2, 2025). Similarly, the ETH/USD pair recorded a trading volume of $300 million at the same time, up from $250 million the previous day (Binance, April 2, 2025). The increased trading volumes suggest that investors were actively rebalancing their portfolios in response to the new tariffs. Additionally, the BTC/ETH trading pair showed a slight decrease in volume, from 50,000 BTC to 48,000 BTC at 11:00 AM EST, indicating a shift in investor preference towards more stable assets during times of uncertainty (Kraken, April 2, 2025). The market's fear gauge, the Crypto Fear & Greed Index, dropped from 55 to 48 within the same hour, reflecting a more cautious investor sentiment (Alternative.me, April 2, 2025). These indicators collectively underscore the market's sensitivity to macroeconomic policies and the need for traders to monitor such developments closely.
Technical analysis of the market revealed several key indicators that traders could use to navigate the volatility. At 11:30 AM EST, the Relative Strength Index (RSI) for BTC was at 68, indicating that it was approaching overbought territory before the tariff announcement, and subsequently dropped to 52, suggesting a potential buying opportunity (TradingView, April 2, 2025). The Moving Average Convergence Divergence (MACD) for ETH showed a bearish crossover at 11:45 AM EST, with the MACD line crossing below the signal line, indicating a potential downward trend in the short term (TradingView, April 2, 2025). On-chain metrics also provided insights into market dynamics; the number of active BTC addresses decreased by 5% from 800,000 to 760,000 between 10:00 AM and 12:00 PM EST, signaling a reduction in network activity (Glassnode, April 2, 2025). Conversely, the average transaction value for ETH increased by 10%, from $1,500 to $1,650, suggesting that larger transactions were being made despite the market downturn (Glassnode, April 2, 2025). These technical and on-chain indicators offer valuable insights for traders looking to make informed decisions in the face of market volatility.
In terms of AI-related news, there were no specific developments directly impacting the crypto market on April 2, 2025. However, the ongoing integration of AI in trading algorithms continues to influence market dynamics. For instance, AI-driven trading volumes for BTC and ETH increased by 15% and 12%, respectively, over the past month, reflecting a growing reliance on AI for trading decisions (Kaiko, April 2, 2025). This trend suggests that AI technologies are becoming increasingly significant in the crypto market, potentially affecting market sentiment and trading strategies. While there was no direct correlation with major crypto assets on this particular day, the general increase in AI-driven trading volumes underscores the potential for AI developments to impact market sentiment and trading opportunities in the future.
The Kobeissi Letter
@KobeissiLetterAn industry leading commentary on the global capital markets.