Bitcoin Retreats as U.S.-China Trade Tensions Trigger Renewed Risk Aversion

Bitcoin extended its slide on Tuesday, cutting short a brief rebound as escalating tensions between Washington and Beijing reignited global risk aversion, prompting traders to rotate out of crypto assets and into traditional havens like gold.

Bitcoin Pulls Back After Record Rally

The world’s largest cryptocurrency fell 1% to $113,547.0 by 04:53 GMT, reversing gains from Monday when it had recovered to above $115,000 after a weekend plunge to $103,800. The decline follows last week’s all-time high above $126,000, highlighting how quickly sentiment in digital assets can shift amid macroeconomic shocks.

Trade War Fears Erode Crypto Confidence

The renewed selloff came after U.S. President Donald Trump threatened to impose 100% tariffs on Chinese goods, a move that wiped out roughly $500 billion in crypto market capitalization in days. While Trump later sought to ease concerns—assuring markets that the U.S. “was not seeking harm to China”—investors remained cautious, as Beijing vowed to “fight to the end” and accused Washington of “discriminatory practices.”

China’s Ministry of Commerce confirmed that working-level discussions were ongoing but stood firm on its export restrictions for rare earth materials, a key flashpoint in the dispute. The uncertainty has unnerved traders who fear prolonged friction could undermine global demand and liquidity—conditions that often weigh on speculative assets like Bitcoin.

Flight to Safety Dampens Crypto Appetite

Investor preference shifted toward safe-haven assets, with gold hitting fresh record highs above $4,100 per ounce on Tuesday. The stronger demand for bullion and the U.S. dollar further weakened sentiment in crypto markets, which tend to move inversely to risk aversion trends.

Altcoins Remain Subdued Amid Macro Headwinds

Broader crypto markets traded in a flat-to-lower range, mirroring Bitcoin’s cautious tone.

• Ethereum (ETH) slipped 0.4% to $4,116.56, after briefly falling below $3,400 over the weekend.
• XRP edged down 0.6%, staying under the $3.00 mark.
• Solana (SOL) rose 4.8%, and Cardano (ADA) added 1.1%, as selective buying emerged.
• Among memecoins, Dogecoin (DOGE) dipped 0.7%, while $TRUMP gained 2%.

Outlook: Fragile Market Sentiment

Analysts said the broader crypto market remains highly sensitive to macro developments, particularly U.S.-China relations and monetary policy expectations. Persistent volatility and doubts over corporate treasury allocations in Bitcoin could limit upside potential in the near term.

With risk appetite subdued and safe-haven demand rising, Bitcoin may continue to consolidate below recent peaks until clearer signals emerge on the trade front or Federal Reserve policy trajectory.