Bitcoin surged to a new intra-day high of $74,942 on Tuesday, reacting to renewed geopolitical friction after China rejected claims it was arming Iran and pushed back against US tariff threats. These developments unfolded as tensions between Washington and Beijing escalated, shaping market sentiment and triggering volatility across global asset classes.
China rejects arms allegations, warns on tariffs
Chinese Foreign Ministry spokesperson Guo Jiakun addressed public allegations of Chinese military support for Iran, stressing that Beijing “always acts prudently and responsibly on the export of military products.” Guo described media reports as “purely fabricated” and emphasized that China follows strict legal controls in its export practices.
The official statement came after US intelligence assessments suggested China was preparing to ship air defense systems to Iran. While details remain limited, former US President Donald Trump publicly outlined an immediate 50% tariff on all US-bound goods from any country supplying arms to Tehran.
“A Country supplying Military Weapons to Iran will be immediately tariffed, on any and all goods sold to the United States of America, 50%, effective immediately. There will be no exclusions or exemptions! President DJT,” wrote Trump in a message posted on Truth Social.
Relations between the US and China have been strained for much of the past year, resulting in unpredictable swings in both equity and crypto markets. Last year’s announcement of a 100% tariff on Chinese products erased nearly $200 billion in market value almost overnight for cryptocurrencies.
Trade dynamics were further influenced by the US decision to order a blockade of Iran’s key Strait of Hormuz shipping corridor, following a breakdown in talks. Oil markets quickly adjusted, with trade data showing a marked increase in long positions for WTI crude futures and a similar trend in gold.
Capital.com, a global trading platform, registered a shift: oil traders moved en masse into long positions, while four major currency pairs saw traders switch predominantly to net short bets during the period of heightened tension.
Crypto rally meets warnings on market sentiment
Bitcoin’s climb intensified over the weekend as a significant short squeeze liquidated around $89 million in bearish derivatives. In addition, renewed inflows into spot Bitcoin ETFs, especially BlackRock’s IBIT with $269 million in one day, contributed to bullish momentum.
The world’s most valuable cryptocurrency broke above $74,000, approaching the $75,000 mark, before settling near $73,141 at the time of publication.
Cameron Winklevoss, co-founder of Gemini, referencing Bitcoin’s repeated resilience, remarked on social media with a rhetorical question, underlining the asset’s longstanding volatility and frequent predictions of its demise.
“Why is bitcoin hitting $74k? I thought bitcoin was dead?” Winklevoss posted in a social media comment, highlighting the narrative of repeated Bitcoin recoveries.
Despite the exuberance, market analysts cautioned against overconfidence. Michael Nadeau, founder of DeFi Report, noted that strong conviction coupled with low trading volumes had previously preceded downturns in 2022.
“BTC does not bottom when everyone thinks the bottom is in… sentiment suggests the average investor is already allocated,” Nadeau pointed out.
Monte Safieddine, Head of Market Research at Capital.com, added that ongoing US action in the Strait of Hormuz and shifting equity indices are driving profit-taking in risk assets. He observed a broad cut in long bias among US stocks and a preference for short positions in major currency pairs as traders react to geopolitical headlines.
The number of traders holding long positions in the S&P 500 dropped to 61% from 64%, and Dow traders reduced long exposure from 67% to 60% since the week’s start.
Whether Bitcoin can sustain its rally above $74,000 will likely depend on the progression of the standoff between China and the US, and the speed with which rhetoric turns into actionable policy developments.
