Bitcoin (BTC) Rally Restarts as Trump Hints at Tariff U-Turn

Bitcoin (BTC) volatility persisted on Wednesday as traders reacted to fresh developments in U.S. trade policy.

Bitcoin (BTC) volatility persisted on Wednesday as traders reacted to fresh developments in U.S. trade policy.

Since President Donald Trump announced the creation of a Crypto Strategic Reserve on Sunday, March 2, BTC has traded within 10% ranges for three consecutive days.

After surging 11% following the strategic reserve announcement, Bitcoin’s rally was abruptly halted when Trump confirmed a 25% import tariff on Canada and Mexico, triggering a sharp 15% sell-off on Monday. However, the market took another dramatic turn on Wednesday.

Late Tuesday, U.S. Secretary of Commerce Howard Lutnick stated that President Trump will “probably” reach a compromise with Canada and Mexico in the coming days. Traders responded swiftly, piling into buy orders on optimism that an anticipated tariff rollback could ease economic uncertainty, bolstering risk assets like Bitcoin.

Within 12 hours of Lutnick’s statement, BTC surged 10%, rallying from its weekly low of $81,400 recorded on Tuesday to reclaim levels above $91,500 by mid-day in U.S. trading. If bullish momentum holds, a close above $90,000 could reinforce a broader breakout attempt, setting the stage for Bitcoin to target new highs.

Lance Roberts flags Trade war reactions exerting bearish pressure on BTC price action

On Wednesday, BTC price reclaimed territories above the $91,500 level as markets reacted to speculations that U.S. President Donald Trump could ease tariffs imposed on Canada and Mexico. Bitcoin analyst Lance Roberts published charts showing how U.S. Trade policy has impacted financial markets in recent weeks.

“Trade War 1 vs Trade War 2. So far, the #market is tracing out Trump’s first trade war fairly closely. While no two markets are ever the same, it is worth noting that even though markets declined, they also rallied. The point here is to ignore media headlines and focus on your portfolio.”

– Lance Roberts, March 5, 2025

Diving into the chart he posted, Lance Roberts’ chart draws a striking parallel between the S&P 500’s performance during the 2019 trade war and its 2025 trajectory, illustrating how historical market reactions to U.S. trade tensions could be playing out again.

In 2019, the market initially rallied before experiencing volatility linked to major trade-related developments.

One key moment highlighted in the chart is when former President Trump called off 25% tariffs on Mexico, triggering a strong rally.

Later, news of Trump-Xi trade deal talks fueled further gains, reinforcing the notion of a “Trump put”—the market’s expectation that Trump would eventually ease trade tensions to support equities. This de facto put acted as a backstop, preventing prolonged downturns despite interim sell-offs.

So far in 2025, the S&P 500 has followed a similar script, with a strong start before recent weakness, aligning with the early phases of the 2019 pattern.

This suggests that while the market is experiencing turbulence amid trade concerns, a potential bullish pivot could occur if Trump signals a shift in policy, just as it did in 2019. If history rhymes, Bitcoin could benefit as a risk asset.

BTC Price Outlook on US Trade War

However, the bearish case remains compelling. Unlike in 2019, today’s market is contending with structurally higher interest rates, which could dampen any relief rallies. Additionally, the Federal Reserve’s policy stance is less accommodative, meaning liquidity injections that cushioned past downturns may not materialize.

Ultimately, whether the 2019 pattern continues to play out in full will depend on the next moves from policymakers.

If trade tensions escalate further without policy relief and risk appetite deteriorates, BTC’s recent gains could be short-lived, exposing the market to deeper corrections.

Conversely, if Trump eases the tariffs this week, both S&P 500 equities and Bitcoin price could be poised for another leg higher. In this case BTC price could hit new all-time highs near $120,000 once U.S. Treasury begins buying BTC and other assets included in the crypto strategic reserve bucket.