Geopolitical Tensions Between U.S. and China Weigh Heavily on Crypto and Tech Sectors

As trade and diplomatic frictions escalate between the Trump administration and China, cryptocurrency markets and technology stocks are experiencing significant volatility. The uncertainty surrounding regulatory crackdowns, supply chain disruptions, and potential sanctions has created a risk-off environment for investors. Digital assets, often viewed as speculative bets on global macroeconomic stability, have seen sharp sell-offs amid the deteriorating relations. Meanwhile, major tech firms with exposure to Chinese manufacturing or consumer markets face mounting pressure. Analysts warn that prolonged tensions could accelerate the decoupling of financial and technological ecosystems between the two economic superpowers, with crypto markets caught in the crossfire as both nations pursue competing digital currency initiatives.

In Brief

• Trade tensions between the United States and China have reached a new peak with US tariffs of up to 245%.
• Cryptocurrencies and tech stocks show a strong correlation in response to these geopolitical tensions.
• Investors await the Fed’s next decisions on May 6.

Cryptos and Tech Under Pressure Amid the Return of the Trade War

The White House officially announced on April 15 a series of tariff measures against Chinese products, rekindling tensions with Beijing in a context of an increasingly strategic trade war.

These sanctions include a reciprocal tariff of 125%, a 20% tax related to the fentanyl crisis, and additional duties ranging from 7.5% to 100% on certain specific products.

This decision marks the beginning of “a new phase of the trade war“, according to Aurélie Barthere, lead analyst at Nansen. This escalation particularly targets high value-added sectors such as technology and the pharmaceutical industry.

Data show that cryptocurrencies and American stocks have been moving in strong correlation since November 2024. This downward trend intensified during the recent correction, with investors reducing exposure to assets considered risky, especially those seen as “expensive”.

Nvidia perfectly illustrates this situation. The American semiconductor giant saw its shares drop 8% after announcing a potential loss of $5.5 billion related to export restrictions on its H20 chips to China.

All Eyes Turned to the Fed

In the face of rising tariff tensions and inflation concerns, the speech by the chairman of the US Federal Reserve, Jerome Powell, at the upcoming FOMC meeting on May 6 will be closely watched.

Analysts from the exchange Bitfinex explained to Cointelegraph:

A firm tone from Powell could trigger another drop in risk assets such as bitcoin.

Conversely, “a more nuanced stance could calm the markets“, which already experienced significant rebounds last week on many risk assets.

The crypto market volatility amid macroeconomic news does not reflect a change in fundamentals, but rather cautious positioning and shaken investor confidence.

In this context of uncertainty, gold continues to affirm itself as the ultimate safe haven, reaching a historic high of $3,300 an ounce. Meanwhile, the Bitcoin price has heavily dropped, with some analysts, including those from QCP Capital, even questioning its role as a safe haven.

Market recovery will largely depend on the progress of tariff negotiations, with a potential resolution expected by June 2025, according to forecasts from Nansen analysts.

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