Bitcoin less reactive to tariff announcements, analysts say

It appears the days when President Donald Trump's pronouncements on trade policy could send shockwaves through the Bitcoin market are waning.

While past tariff threats elicited immediate and often dramatic price swings, Bitcoin's recent reaction to similar announcements suggests a growing resilience to Trump's trade rhetoric.

Past reactions: a history of tariff-induced volatility

Just a week ago, Trump's threats to impose tariffs on Canadian, Mexican, and Chinese imports sent Bitcoin tumbling to $93,000.

However, his latest policy remarks regarding aluminum and steel tariffs had a far more muted impact.

Recent announcement: a muted market response

Despite signaling potentially escalating trade tensions with the announcement of 25% levies on aluminum and steel imports from all countries, US stocks opened higher, and shares of US steel manufacturers surged.

Bitcoin, while dipping briefly to $94,700 on Sunday night, quickly recovered, climbing to $97,700 by Monday's opening bell.

Analysts weigh in

With broader markets largely unfazed by Trump's pregame ultimatum, it appears fears linked to his potential trade moves are fading, according to analysts.

"The market is starting to see through Trump's tactics," said Tom Dunleavy, a partner at MV Global, to Decrypt.

The reciprocal tariff shift: a less aggressive approach?

Over the past couple of weeks, Trump's use of tariffs as a negotiating tool with US trading partners has drawn heightened attention from market participants.

The US central bank signaled at its December policy meeting that it’s monitoring how potential shifts in trade policy could impact its inflation outlook.

If tariffs contribute to inflation, that could encourage Fed policymakers to keep interest rates higher for longer.

While Trump's administration initially appeared poised to implement "universal" tariffs, the announcement of "reciprocal" tariffs, targeting only nations currently imposing levies on American goods, marks a significant shift.

Geoff Kendrick, global head of digital assets research at Standard Chartered, emphasized the importance of this distinction, explaining to Decrypt that reciprocal tariffs would be less inflationary and would take longer to impose than "universal" ones.

He called Trump's latest remarks a notable step away from a more aggressive trade stance.

“It is a step away from ‘Bad Trump,’ and markets are tentatively acknowledging that,” he said.

Looking ahead: the China factor remains

While Mexico and Canada were able to strike deals avoiding sweeping trade disruptions in North America, Trump's relationship with China remains a key factor to watch.

According to Jake Ostrovskis, an OTC trader at Wintermute, Trump’s relationship with China warrants watching, but his remarks on steel and aluminum were still a meaningful dud.

“This kind of 'news failure' suggests that the narrative is losing traction as a key market driver,” he wrote in a Monday note.