Analyst Said Bitcoin Overreacted to the Latest Drop: Caution! Volatility May Continue - Coin Bulletin

China's new retaliatory tariffs against the US have caused sharp fluctuations in global markets, as well as in the price of Bitcoin, which is currently at (BTC). However, experts point out that the markets have overreacted to this news and that the volatility could continue for a while longer.

China had increased uncertainty and volatility in financial markets by announcing new additional tariffs on US goods. According to the statement of the Chinese Ministry of Finance, as of February 10th, a 15% additional customs duty would be applied to coal and liquefied natural gas, and a 10% additional customs duty would be applied to crude oil, agricultural machinery, and certain vehicles. At the same time, the Chinese Ministry of Commerce had announced that it would tighten export controls on products containing tungsten, tellurium, bismuth, molybdenum, and indium.

Bitcoin continues to be seen as a risky asset

Presto Research research analyst Min Jung had stated that, despite Bitcoin being increasingly seen as digital gold, it still trades as a risky asset. According to Jung, China's retaliatory 10% additional tariff had exerted pressure on global risk assets such as stocks, and had also negatively affected cryptocurrencies:

The initial reaction today was likely an overreaction, but it is likely that market volatility will remain high for a while. The real question is whether this move is a negotiating tactic or the beginning of a long-term trade war. Similar tensions have occurred with Canada and Mexico in the past, and there have been retreats. However, China is at the center of Trump's policies, and time will tell how the process will develop.

According to CoinDesk analysis, such major liquidation events can provide 'buying from the bottom' opportunities. Investors tend to turn to dollar-based stablecoins as a hedge against market uncertainties. However, if the trade tensions between China and the US continue to escalate, it seems inevitable that there will be more volatility in the crypto market.