The cryptocurrency market saw a significant recovery following U.S. President Donald Trump's decision to temporarily halt proposed tariffs on Canada and Mexico. This move eases concerns over potential economic disruptions as negotiations between the countries continue.
Tariff Pause and Border Security Measures
Canadian Prime Minister Justin Trudeau announced on February 3rd that after a phone call with Trump, the 25% tariffs on Canadian imports would be paused. In exchange, Canada agreed to strengthen security measures, including a $1.3 billion border plan, appointing a fentanyl czar, and listing certain cartels as terrorist organizations. Similarly, tariffs on Mexican imports were also postponed. President Claudia Sheinbaum confirmed that both nations had reached an agreement to enhance border security and trade cooperation. However, in an interview with Bloomberg TV, Trump clarified that the tariffs are on hold but have not been entirely dismissed.
Crypto Markets React to Policy Shifts
Following the tariff suspension, Bitcoin (BTC) surged past the $100,000 mark, recovering from a low of $92,000. Ether (ETH) also rebounded, climbing to $2,880 after briefly dropping to $2,451. The Crypto Fear & Greed Index moved into 'greed' territory with a score of 72, reflecting renewed investor confidence.
Trump Orders Creation of Sovereign Wealth Fund
In another significant move, Trump signed an executive order directing the U.S. government to explore the creation of a sovereign wealth fund. Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick will oversee the process, with implementation expected within the next 12 months. The order aims to monetize U.S. assets, though details remain unclear on whether cryptocurrencies like Bitcoin would be included. Some lawmakers and industry advocates believe it could pave the way for government involvement in Bitcoin holdings.
The combination of policy shifts and potential for positive changes are signals of renewed optimism in the crypto markets. Investors are closely monitoring developments on tariffs, regulatory changes, and the potential sovereign wealth fund, as each could significantly impact market dynamics in the coming months.
