Bitcoin Slumps Post US-China Trade Deal as Stocks Steal the Spotlight

Bitcoin experienced a notable downturn on May 12, 2025, slipping from a three-month peak of $105,720 to around $102,000, defying expectations after a US-China agreement eased trade tensions with a 90-day tariff suspension. This unexpected pullback has puzzled market observers, as the deal, which lowered import duties and hinted at potential extensions, initially sparked optimism. Instead, the focus has shifted toward equities, with macroeconomic conditions favoring stocks over traditional safe-haven assets like gold, leaving Bitcoin struggling to maintain its recent upward trajectory amid a bustling market environment.

The trade truce, reducing US tariffs on Chinese goods and vice versa, has injected confidence into the financial landscape, driving the US Dollar Index (DXY) to a 30-day high despite mixed economic signals, including a 0.3% drop in first-quarter GDP and a 6.1% surge in pending home sales from the prior month. This shift has bolstered stock markets, with futures gaining ground, while gold dipped 3.4% as demand for safe-haven investments waned. Bitcoin, after a strong 24% rise over the past 30 days—outpacing the 7% climb in S&P 500 futures and flat gold performance—now faces a high correlation with stocks at 83%, suggesting investors see little need for further divergence into cryptocurrencies.

Adding to the complexity, recent moves by a major corporate player to acquire over 13,000 BTC between May 5 and May 11, bringing its total holdings, alongside another large investor, to 1.19 million BTC (about 6% of circulating supply), have sparked debate. Some market watchers caution that the rising average purchase cost could strain finances, potentially forcing sales to offset borrowing costs, though the company’s recent expansion of its capital and debt limits by $21 billion each suggests resilience. This accumulation, however, underscores institutional interest, with $2 billion flowing into US spot Bitcoin exchange-traded funds (ETFs) from May 1 to May 9, signaling strong backing that may cushion against a drop below $100,000.

The broader macroeconomic landscape now favors equities, as the tariff pause promises higher corporate revenues and profit margins, diminishing Bitcoin’s appeal as a scarce asset. The lack of investor conviction near $105,000 reflects this shift, with the cryptocurrency stalling as stocks reap the immediate benefits of the trade deal. While the steady ETF inflows and institutional adoption point to a solid foundation, the current market dynamics suggest Bitcoin’s near-term momentum may hinge on how trade developments and economic data, like upcoming US inflation figures, reshape investor priorities in the days ahead.