Bitcoin, Asian Markets Drop Amid U.S. Tariffs and China Tensions

Markets in Asia turned risk-off Thursday as investors reacted to U.S. President Donald Trump’s sweeping tariff hike, which imposes a 34% tariff on Chinese goods—on top of the existing 20%—bringing the total to 54%, the highest for any country. The tariffs also target imports from 180 nations, notably the EU, but exclude Canada and Mexico.

Market sentiment hinges on China’s next move. Economists warn that if Beijing responds by devaluing the yuan, it could trigger global market volatility, especially in emerging markets, and possibly spread to the U.S. “Everything now depends on China,” said Robin Brooks of the Institute of International Finance. "A yuan devaluation could ignite a global risk-off wave."

Early Thursday, Beijing demanded the U.S. roll back tariffs and pledged immediate retaliation. The Chinese yuan slipped to a seven-week low of 7 RMB/USD, while Asian equities sank, with Japan’s Nikkei hitting an eight-month low. U.S. stock futures dropped more than 2%, underscoring global risk aversion.

Bitcoin (BTC), often seen as a barometer for risk sentiment, tumbled from $88,000 to $82,500 following the tariff announcement and now trades near $83,300. A bearish “death cross” pattern—where BTC’s 50-day moving average appears set to fall below the 200-day average—is forming. Though not always predictive, its timing amid growing trade tensions has traders watching closely.

Options markets are showing increased demand for downside protection, with put options gaining traction through June, signaling investor caution. The People’s Bank of China may intervene to stabilize the yuan, a move that could boost the U.S. dollar and put further pressure on stocks and crypto markets.