Tariffs ease, sparking crypto market rebound—Bitcoin and Ethereum regain lost ground

After a brutal sell-off, Bitcoin and Ethereum are back in action. With Trump pausing tariffs on Canada and Mexico, optimism is creeping back into the market—will the rally last?

The crypto market has staged a strong rebound after a brutal sell-off triggered by the U.S. President Donald Trump’s tariff announcement on Feb. 1. 

Bitcoin (BTC), Ethereum (ETH), and the broader digital asset market saw heavy losses after the U.S. moved to impose tariffs on Canada, Mexico, and China, but a temporary pause on trade restrictions for Canada and Mexico has since sparked renewed optimism.

BTC, which plunged to a low of $91,200 on Feb. 3 following Trump’s tariff declaration, has recovered sharply, trading around $101,000 as of Feb. 4—a 7% gain in the last 24 hours, though still down nearly 2% on a weekly basis. 

ETH, which suffered an even deeper plunge to $2,460, has bounced back more aggressively, rising nearly 10% in the last 24 hours to $2,800, though it remains 12% lower than a week ago.

The broader crypto market has followed suit, with total market capitalization surging 8.5% in the past day to reach $3.43 trillion, according to CoinGecko. 

Investor sentiment has also turned positive, as the Crypto Fear & Greed Index has climbed back to 72—indicating a shift into “greed”—after hitting a fear-driven low of 44 during the crash.

Tariff fears and market jitters

The sell-off began on Feb. 3, when Trump’s order introduced new tariffs, sending shockwaves across financial markets, including crypto. 

China was hit with a 10% tariff, while Canada and Mexico faced steeper 25% duties. The move triggered immediate uncertainty, causing risk assets—including cryptocurrencies—to tumble.

However, within hours, diplomatic efforts were already in motion. 

Canadian Prime Minister Justin Trudeau announced on X that he had spoken with Trump and secured a temporary 30-day pause on the tariffs while both countries worked on a broader border security agreement. 

The deal includes a $1.3 billion security plan, appointing a Fentanyl czar, and reinforcing the U.S.-Canada border. 

Mexico followed a similar path, with President Claudia Sheinbaum confirming that the tariffs would be put on hold for a month as both nations worked toward strengthening their land border agreements.

Despite these temporary resolutions, uncertainty remains. Trump, in a Feb. 3 interview with Bloomberg TV, made it clear that no final agreement had been reached and that tariffs on Mexico could still take effect. 

Meanwhile, China, the only country not included in the pause, is reportedly prepared to negotiate, according to a Feb. 3 Wall Street Journal report.

AI, global markets, and crypto’s volatility

While the latest tariff battle sparked the recent market turbulence, crypto prices were already on shaky ground last week due to another development. 

The release of a new artificial intelligence model by China-based DeepSeek raised concerns about the growing capabilities of non-U.S. AI firms, impacting global tech markets. 

This, combined with the tariff fears, led to heavy liquidations in crypto before the rebound took hold.

Now, as traders react to the latest developments, markets remain on edge. While the pause in tariffs has given crypto some breathing room, the situation remains fluid. A prolonged trade war or additional geopolitical shifts could easily reignite selling pressure.