The cryptocurrency market is experiencing volatility amidst China’s trade tariff impact, with XRP and Dogecoin rising by as much as 20% before dipping.
The crypto market has experienced a significant surge in recent days, with XRP and Dogecoin rising by as much as 20% before dipping due to the imposition of tariffs on imports from ‘China’.
Ripple is a real-time gross settlement system (RTGS) developed by Ripple Labs Inc., which allows for instantaneous, low-cost cross-border payments.
XRP is the native cryptocurrency of the Ripple network and is used to facilitate these transactions.
Unlike other cryptocurrencies, XRP is pre-mined and its supply is capped at 100 billion coins.
The majority of XRP is held by Ripple Labs, with a small portion available on various exchanges for trading.
Market Volatility Continues Amid Trade Tensions
The decision by Donald Trump to impose tariffs on Canada, Mexico, and ‘China’ led to a steep drop in bitcoin and broader equity markets on Monday. However, this move also created an opportunity for traders to ‘buy-the-dip,’ as seen with the recent surge in dollar-backed stablecoins.
Experts Weigh In on Tariff Impact
Ben El-Baz, Managing Director of HashKey Global, noted that the U.S.-China tariff conflict could decrease the appetite for risk assets and further impact the positive sentiment driving the crypto industry. However, he also suggested that the damage from tariffs could be temporary if more crypto-friendly policies are implemented in the U.S.
Min Jung, research analyst at Prestro Research, pointed out that despite Bitcoin’s growing reputation as ‘digital gold,’ it still largely trades like a risk asset. As a result, China’s retaliatory 10% tariff on the U.S. is pressuring crypto markets, similar to other global risk assets such as equities.
Market Sentiment Remains Mixed
Traders remain divided on the long-term impact of China’s retaliatory decisions, with some expecting a reversal and others anticipating a prolonged drawdown if further actions against the country occur under Trump.
With a population of over 1.4 billion, China has become the world's largest consumer market and second-largest economy.
The country's economic growth is driven by its manufacturing sector, which accounts for over 30% of global production.
China's Belt and Road Initiative (BRI) aims to connect Asia with Europe and Africa through a vast network of trade routes.
In 2020, China surpassed the US as the world's largest trading nation, with a total trade value exceeding $4 trillion.
The imposition of tariffs has sparked interest in dollar-backed stablecoins as a hedge against economic uncertainty and currency volatility. However, the potential for retaliatory measures from affected countries could lead to further volatility across the crypto market in the days to come.
Dollar-backed stablecoins are a type of cryptocurrency that is pegged to the value of the US dollar.
They are designed to maintain a stable price by holding an equivalent amount of dollars in reserve, usually in a bank account or through a collateralized loan.
This allows users to trade and store their assets with minimal risk of volatility.
For example, DAI is a popular dollar-backed stablecoin that is pegged to the US dollar at a 1:1 ratio.
Market Update
XRP, Dogecoin (DOGE), Solana‘s SOL, and Cardano‘s ADA are currently up nearly 3%, while Bitcoin (BTC) and ether (ETH) have risen by approximately 4%.
- coindesk.com | XRP and Dogecoin Surged 20%, Then Dipped as China Tariffs Dent Crypto Rebound
- businessinsider.com | XRP and Dogecoin Surged 20%, Then Dipped as China Tariffs Dent ...
