How Global Tariff Woes Are Impacting Cryptocurrency and Traditional Markets: Insights from Nansen Analysts

Global Tariff Concerns Loom Over Cryptocurrency and Traditional Markets

In a recent analysis by Nansen, the prevailing concerns over global tariffs have been cited as a significant influence on both cryptocurrency and traditional financial markets. Analysts have indicated that these tariff worries could persist until at least early April, with potential resolutions leading to notable market reactions.

Exodus of Bitcoin Value Amid Tariff Announcements

Since U.S. President Donald Trump announced import tariffs on Chinese goods on January 20, Bitcoin’s (BTC) price has plummeted by more than 17%. This substantial decline marked the beginning of his presidential term, highlighting how closely tied the cryptocurrency market is to geopolitical developments. Nicolai Sondergaard, a research analyst at Nansen, discussed the situation during Cointelegraph’s Chainreaction daily X show on March 21, emphasizing that the tariffs remain “the biggest driver” of market behavior.

“I’m looking forward to seeing what happens with the tariffs from April 2nd onwards. Maybe we’ll see some of them dropped, but it depends if all countries can agree. That’s the biggest driver at this moment,” Sondergaard stated. Analysts suggest that until these trade-related tensions are resolved, sentiment in risk assets may remain muted. However, a possible resolution—expected between April 2 and July—could act as a catalyst for market recovery.

Anticipation Surrounding Tariff Implementation

The implementation of reciprocal tariff rates by President Trump is set to commence on April 2, despite earlier indications from Treasury Secretary Scott Bessent regarding potential delays. As uncertainty looms, the market waits with bated breath for clarity.

The impact of tariff anxieties is further compounded by the current stance of the Federal Reserve, which is also believed to be affecting investor risk appetite. “We’re waiting for the Fed to see proper ‘bad news’ before they will really start cutting rates,” Sondergaard noted.

Interest Rates and Market Dynamics

Recent assessments from the CME Group’s FedWatch tool indicate an 85% probability that the Federal Reserve will maintain steady interest rates during the next Federal Open Market Committee (FOMC) meeting on May 7. This approach is expected to continue exerting downward pressure on risk assets, including cryptocurrencies.

Despite the market’s apprehensions, optimism remains. Iliya Kalchev, an analyst at Nexo, suggests that concerns over inflation and recession may be transitory. The current climate potentially presents a favorable outlook for investors if inflation cools and economic stability is achieved.

“Markets may now expect upcoming economic data with greater confidence,” Kalchev stated, urging investors to monitor key economic indicators such as Consumer Confidence, Q4 GDP, jobless claims, and the upcoming PCE inflation report. Such reports will play a crucial role in shaping expectations around future interest rate cuts and, consequently, the broader market environment for both cryptocurrencies and traditional assets.

Conclusion

As global tariff concerns continue to dominate discussions among analysts, the forthcoming weeks could prove pivotal for both cryptocurrency and traditional markets. The interplay between international trade policies and domestic monetary policy remains integral to understanding market direction and potential recovery in the months ahead. Investors are advised to stay vigilant and informed about unfolding economic data that may influence their strategies moving forward.