After rising 20%, XRP and Dogecoin faced a dip, as fresh tariffs from China weighed on the crypto rebound.

Donald Trump’s move to impose tariffs on imports from Canada, Mexico, and China caused a sharp drop in both bitcoin and the broader equity markets on Monday. After the announcement, cryptocurrencies surged up to 20% in a “buy-the-dip” rebound strategy, following a $2.2 billion sell-off, but the positive momentum was short-lived as China retaliated with its own tariffs on the U.S.

The surge was quickly reversed during the early Asian trading hours when the U.S. missed the deadline to impose additional tariffs on China. As a result, while XRP, dogecoin (DOGE), Solana (SOL), and Cardano (ADA) gained nearly 3%, Bitcoin (BTC) and ether (ETH) posted gains of about 4%.

Ben El-Baz, Managing Director at HashKey Global, told CoinDesk, “The U.S.-China tariff dispute could dampen the appetite for risk assets and possibly weaken the optimism that has been driving the crypto bull run over the last year.” He also noted, “If the U.S. introduces more crypto-friendly policies, the effects of the tariffs could be short-lived.”

Despite the immediate sell-off, traders remain divided over whether China’s retaliatory tariffs will lead to a long-term downturn in crypto markets or if the situation will reverse as the trade conflict with China progresses.

Min Jung, a research analyst at Prestro Research, commented, “Although Bitcoin is increasingly being seen as digital gold, it still responds like a risk asset. The 10% tariff from China on the U.S. has placed downward pressure on crypto, similar to its effect on other risk-sensitive assets, such as stocks.”

Jung added, “The initial reaction may have been exaggerated, but we can expect continued volatility as the situation evolves. The crucial question is whether this is just a negotiation tactic that could eventually be reversed, like with Canada and Mexico, or if it signals a longer trade conflict, especially with Trump’s continued focus on China.”

On Monday, the market liquidation led to a “buy-the-dip” opportunity for many traders, with analysts observing that the tariff announcements led to increased demand for dollar-backed stablecoins as a safe haven against potential economic uncertainty and currency instability.

As tensions escalate, the imposition of tariffs could trigger further retaliatory actions, potentially setting off a broader trade war and continuing the market volatility in the coming weeks.