bitcoin Price Drops to $118,000 as U.S.-China Trade Tensions Escalate
October 26, 2023 – Bitcoin‘s price fell to the $118,000s range today following President Trump’s proclamation of plans to increase tariffs on Chinese goods in response to China’s new export controls on rare earth metals. The cryptocurrency is down roughly 2.3% in the past 24 hours and has declined approximately 6% as reaching a record high above $126,000 just four days ago.
President Trump threatened a “massive” increase in tariffs on Chinese goods, signaling a significant escalation in U.S.-China trade tensions and raising doubts about a planned APEC meeting with President Xi. This action followed China’s imposition of new limits on the export of rare earth and related technology trade.
“I was to meet President xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so,” Trump stated on Truth Social.
The new Chinese regulations require foreign companies to obtain special approval to export products containing even trace amounts of Chinese rare earth elements, wich are critical components in a wide range of products including jet engines, electric vehicles, laptops, and phones.
Trade discussions between China and the U.S. this year have covered rare earths, tiktok, and tariffs, with over three rounds of talks held so far. In May, following discussions in Geneva, the U.S. reported that China had agreed to ease some of its rare earth export restrictions.
The market reaction mirrors the downturn experienced in April when President Trump’s ‘Liberation Day’ tariffs, implemented thru Executive Order 14257 which declared a trade deficit emergency, caused market volatility.
Bitcoin began October with a surge, reaching all-time highs above $126,000 during the frist week of the month.The price had recently pulled back to the $121,000 range before today’s decline.
Some analysts suggest the bitcoin market may have entered the “euphoria phase” of the current bull cycle, potentially leading to a further price increase toward the $180,000-$200,000 range before a shift in sentiment.
Year-to-date, bitcoin has increased more than 30% in value, driven by consistent inflows into U.S.-listed Bitcoin exchange-traded funds, renewed investor confidence in digital assets, and expectations of potential interest rate cuts by the Federal Reserve.
Crypto-related stocks, including Circle (CRCL), Robinhood (HOOD), Coinbase (COIN), and MicroStrategy (MSTR), experienced declines of 3%-6% throughout the day.
