Bitcoin Surges: US-China Tariff Deal Ignites Crypto Market Rally

The cryptocurrency market is buzzing following news of a significant de-escalation in trade tensions between the United States and China. A new tariff agreement could remove a major hurdle for risk assets, potentially setting the stage for a substantial market rally across both traditional finance and the digital asset space. Investors are closely watching how this development, combined with potential tax relief, might propel Bitcoin and altcoins.

US-China Tariff Agreement Details

The White House announced on May 12 that the US and China have reached a 90-day tariff agreement. Beginning May 14, both countries will reduce their respective tariffs to 10% for this initial period. This represents a 24% cut from current levels.

Speaking in Geneva, US Treasury Secretary Scott Bessent emphasized the shared desire to avoid further economic decoupling. He stated, “The consensus from both delegations is neither side wants to be decoupled.” Bessent added that the previous high tariffs were akin to an embargo, and both nations desire more balanced trade.

Why Analysts See a Potential Market Rally

According to Aurelie Barthere, a principal research analyst at Nansen, the constructive tone of negotiations and the tariff suspension significantly reduce the risk of “sudden re-escalation.” This positive shift in the macro landscape is seen as a catalyst for a broader market rally.

Barthere noted that Bitcoin has shown resilience recently, trading near its previous highs. However, she believes that with easing trade tensions, other assets are now well-positioned to catch up. This includes altcoins, US equities, and the US Dollar Index (DXY). Nansen had previously estimated a high probability (70%) of crypto and stock markets finding their bottom by June, contingent on trade negotiation outcomes.

The improved global risk sentiment reflected by the trade deal is also expected to strengthen the US dollar against traditional safe-haven currencies like the euro, Swiss franc, and Japanese yen.

Are Bitcoin and Altcoins Poised for Catch-Up?

Bitcoin has outperformed many risk assets in recent months, partly due to its perceived insulation from tariff-related risks. With those risks diminishing, the focus shifts to whether altcoins and traditional markets will follow Bitcoin’s lead or if Bitcoin itself has more room to run.

As of recent data, Bitcoin was less than 5% away from its January 2025 all-time high of over $109,800. Analysts like Barthere suggest that surpassing these previous peaks is possible, especially if additional positive factors emerge. The constructive trade news, combined with emerging technical patterns like a potential bull flag on the weekly chart, has even spurred some analyst calls for a Bitcoin rally towards $150,000.

Tax Relief: An Additional Catalyst for the Crypto Market

While the US-China tariff agreement is a significant positive factor, analysts point to potential tax relief as another major catalyst that could amplify the current market rally.

Barthere suggested that for risk assets to move significantly beyond their January peak levels, a generous tax cut package would be needed. This would involve more than just extending expiring tax cuts; it would ideally include additional income tax reductions and corporate tax cuts.

Treasury Secretary Bessent hinted that such a package might be unveiled by mid-July. If this materializes, it would provide a substantial boost to market sentiment and potentially fuel further gains across the crypto market and traditional equities.

In conclusion, the recent US-China tariff agreement marks a crucial step in reducing global trade tensions. This de-escalation removes a key source of uncertainty for investors and is widely seen by analysts as a positive development for risk assets, including Bitcoin and altcoins. Coupled with the potential for significant tax relief measures in the US, the stage appears set for a potential market rally that could see cryptocurrencies and stocks push past recent highs. The coming weeks will be critical in observing how these macroeconomic factors translate into price action across the digital asset landscape.