Bitcoin, Ethereum Recoup Losses As Trump Halts Tariffs on Canada, Mexico

Bitcoin (BTC), Ethereum (ETH), and the broader crypto market recouped most of their losses incurred after US President Donald Trump’s trade war with China, Canada, and Mexico over the weekend.

Crypto Market Turbulent Amid US-China Trade War

As of Feb. 4, the BTC/USD pair was up about 8% to $98,800 from its local lows, while ETH/USD rebounded 25% to reach around $2,700. Smaller coins, such as XRP (XRP), Solana (SOL), and BNB (BNB), also recovered their losses entirely.

Nonetheless, all coins were reporting intraday losses on the day. The turbulence followed a temporary agreement by the Trump administration to postpone tariffs on Mexico and Canada by a month.

In response to Washington’s decision to impose a 10% tariff on all Chinese goods, China announced new tariffs on select U.S. imports, including oil and liquefied natural gas. Additionally, Beijing revealed plans to investigate U.S. tech giant Google LLC for alleged antitrust violations.

Rising trade tensions have shaken investor confidence in risk assets. On Feb. 3, U.S. investors withdrew a net $235 million from a group of 12 Bitcoin-focused exchange-traded funds.

Meanwhile, open interest in Bitcoin futures dropped, reflecting a more cautious stance among institutional traders.

Jefferies International’s chief economist, Mohit Kumar, expressed a medium-term bullish outlook on risk assets but adopted a more cautious short-term stance due to rising uncertainty. He suggested that while tariffs may not be as harmful as initially feared, market volatility will likely increase soon.

In other words, Bitcoin, Ethereum, and the broader crypto market may see sharper declines and recoveries akin to what it witnessed at this week’s beginning.

Bitcoin Eyes Short-Term Price Declines in February

Bitcoin is experiencing a pullback after testing the upper trendline of its descending parallel channel, signaling potential downside continuation in the near term. The cryptocurrency briefly surged past the $100,000 level before facing resistance around the 0.618 Fibonacci retracement level near $102,400.

The rejection at this key resistance zone has pushed BTC/USD lower, with the price currently hovering around $98,535. Notably, Bitcoin has slipped below its 50-day and 200-day exponential moving averages (EMAs), which stand at $101,079 and $100,439, respectively. A sustained drop below these moving averages could reinforce bearish momentum.

The Fibonacci retracement levels indicate that Bitcoin may find immediate support near the 0.382 level at $98,247. However, if selling pressure intensifies, BTC could extend losses toward the key support region at $94,000, aligning with a previous demand zone and the lower boundary of the descending channel.

Adding to the cautious sentiment, the Relative Strength Index (RSI) on the 4-hour chart remains below the 50 mark, suggesting weakening bullish momentum. If BTC fails to reclaim the $100,000 psychological level, a retest of the $94,145 support area appears increasingly likely.

Ethereum Eyes Rebound Toward $4,000

Ethereum is showing signs of a potential rebound after testing its long-term ascending trendline support near $2,665.

The sharp decline, which saw ETH drop nearly 6% on the day, has led to an oversold reading on the Relative Strength Index (RSI), currently hovering around 31.72. Such RSI levels have historically preceded notable recovery rallies in Ethereum’s price action.

The bounce from the trendline support suggests that buyers are stepping in at this key level, potentially paving the way for a bullish reversal. A sustained move above this trendline could drive ETH toward immediate resistance levels, with the 50-day and 200-day exponential moving averages (EMAs) at $3,266 and $3,128, respectively, serving as key upside targets.

Ethereum could extend its recovery toward the $3,973 resistance zone if bullish momentum strengthens, aligning closely with the psychological $4,000 mark. This level has historically acted as a strong resistance area, making it a crucial price point to watch for further bullish confirmation.