The cryptocurrency market rallied strongly on Friday after U.S. President Donald Trump said he would indefinitely suspend plans to impose tariffs on Canada and Mexico. The development has ignited fresh hopes among investors, driving up the prices of major cryptocurrencies.
Tariffs on Hold
On February 3, Canadian Prime Minister Justin Trudeau said that tariffs of 25% on Canadian goods would be temporarily suspended for at least 30 days. This came after a phone call with Trump in which the two leaders agreed to increase border security measures. Trudeau said that Canada would adopt a $1.3 billion border plan that includes the appointment of a Fentanyl czar and an increase in border personnel.
The same tariffs will also be paused on the Mexican side, said Mexican President Claudia Sheinbaum, to enable the two countries to concentrate on security and trade accords. The pause comes after Trump’s original tariff announcement, on February 1, that featured a 10% tariff against China.
Market Response
The first announcement of the tariffs triggered a huge sell-off in the crypto market, with Bitcoin falling as low as $92,000 on February 3. Following the tariff pause, Bitcoin rallied back to over $101,000, gaining nearly 10% in less than 24 hours. Ethereum rose significantly, too, from $2,460 to nearly $2,880.
Investor sentiment has swung massively, as is evidenced by the Crypto Fear & Greed Index, which rose from 44 to 72, indicating a swing into a greed-dominated market. This rise in the index means that traders’ confidence in the cryptocurrency market is increasing.
Future Outlook
Looking ahead, industry experts see a continuation of the rally in the cryptocurrency market. Later today, David Sacks, recently appointed as Trump’s cryptocurrency advisor, will hold a press conference to outline the U.S. position in the digital asset ecosystem. Key areas that are widely expected to be discussed include possible legislation affecting cryptocurrencies, including tax reforms.
According to analysts, this could be a sign that this pro-crypto stance from the administration, combined with the pause on tariffs, could lead to a more favourable environment for digital assets over the coming months.
As the crypto market stabilizes, traders are being warned to be cautiously optimistic about future developments. The situation remains fluid, and further geopolitical shifts could impact market dynamics.
