Markets Slip as U.S.-China Trade Tensions Escalate; Bitcoin Eyes Bearish ‘Death Cross’
Asian markets fell sharply on Thursday, dragging U.S. stock futures and major cryptocurrencies lower, as investors braced for China’s response to a sweeping wave of new U.S. tariffs announced by President Donald Trump.
Risk sentiment deteriorated across the region after Trump unveiled reciprocal tariffs on imports from 180 countries, targeting China with the steepest penalty — a combined 54% levy following an additional 34% hike. While Canada and Mexico were spared, many Asian economies were caught in the crossfire.
“All eyes are now on China,” said Robin Brooks, chief economist at the Institute of International Finance, on X. “If Beijing allows the yuan to weaken as a countermeasure, it could trigger a full-blown risk-off event, beginning in emerging markets and eventually impacting U.S. assets as well.”
Beijing wasted little time issuing a warning, calling for the U.S. to roll back tariffs and pledging swift retaliation. The offshore yuan promptly slid to a seven-week low of 7 per U.S. dollar, rattling regional equities and fueling concerns of financial market instability reminiscent of 2015 and 2018 currency shocks.
Letting the yuan fall may cushion Chinese exports against U.S. tariffs, but it risks unleashing turbulence in currency markets. Any intervention from the People’s Bank of China to slow the decline could also bolster the dollar, creating additional pressure on risk assets, including stocks and crypto.
Asian stock indices slid broadly, with Japan’s Nikkei hitting an eight-month low. U.S. equity futures pointed to a rough open, with the Nasdaq 100 and S&P 500 both down more than 2%.
Bitcoin (BTC) wasn’t spared either. The flagship cryptocurrency dropped from $88,000 to as low as $82,500 following the tariff news, and was trading near $83,300 at press time. A bearish technical signal is now looming as BTC’s 50-day simple moving average is on the verge of crossing below the 200-day average — a pattern known as a “death cross.”
While the death cross doesn’t always lead to sustained downtrends, analysts note its significance amid mounting macro uncertainty. Derivatives data from platforms like Deribit and Amberdata show increased demand for downside protection, with put options gaining favor into the end of Q2.
As geopolitical and economic tensions rise, investors may continue rotating out of risk assets until clearer signals emerge from Washington and Beijing.
