Trump’s Bold Tariff Announcement Sends Markets Soaring

U.S. President Donald Trump’s unexpected announcement regarding import tariffs has significantly impacted both traditional markets and the cryptocurrency world. Trump declared a reciprocal 10% tariff on all countries except China, while suspending planned tax increases for 90 days. Following this announcement, the S&P 500 index surged by 9.51%, and the Nasdaq jumped by 12.02%. The cryptocurrency market also experienced a notable rise, with Bitcoin $84,505 increasing by 8.43% and Ethereum $1,588 by 13.38%.

The Market Celebrates, but Eyes Turn to Inflation Data

Markets reacted positively to Trump’s statements, creating a celebratory atmosphere. The robust increases in U.S. stock indexes indicated a significant improvement in investor sentiment. The cryptocurrency market mirrored this enthusiasm, with Bitcoin, Ethereum, and other cryptocurrencies quickly gaining double-digit value.

However, this rapid ascent led to substantial liquidations. Approximately $75 million in short positions were liquidated within just an hour following Trump’s announcement. This swift liquidation amount underscores the extent to which market expectations reversed. According to QCP Capital, the sustainability of this short-term rally remains questionable, as some institutional investors view this surge as an opportunity to exit positions.

QCP Capital indicates that the persistence of the surge in global markets and the cryptocurrency sector hinges on inflation data set to be released from the U.S. at 3:30 PM (UTC). These inflation figures will be crucial for determining the short-term direction of markets.

A Stark Warning to China: Yuan Plummets

Trump’s generally conciliatory tone shifted dramatically concerning China. Tariffs imposed on China were increased to 125%. President Trump justified this move by stating, “Beijing shows no respect for global markets.” Consequently, the Chinese yuan fell to its lowest level in 18 years, dropping to 7.3498 against the dollar.

This depreciation of the yuan serves as a buffer for Chinese exporters to maintain competitiveness. However, Washington’s direct targeting raises the likelihood of a strong retaliation from Beijing. As markets brace for potential countermeasures from China, there is concern that the current market rise may turn into a false “bull trap.”

Cryptocurrency Options Signal Mixed Trends

Recent developments have somewhat eased market volatility in the short term. The Bitcoin options market is witnessing selling pressure in May and June contracts, indicating that some investors view the surge as temporary and continue to adopt a risk-averse stance.

Nonetheless, long-term optimism has not entirely vanished. Notably, there have been significant purchases of December call options for Bitcoin at the $100,000 mark. Such transactions suggest that expectations for the largest cryptocurrency to reach record levels again by year-end remain alive.