Bitcoin and broader crypto markets rallied significantly following US President Donald Trump's announcement to extend the deadline for imposing a 50% tariff on European Union goods from June 1 to July 9, 2025. The decision came after a productive discussion with European Commission President Ursula von der Leyen, who requested additional time to negotiate a favorable trade deal.
This delay relieved immediate fears of a trade war between the US and EU, which had recently weighed on global markets and contributed to a downturn in cryptocurrencies. In the 12 hours following the announcement, the total crypto market capitalization rose by nearly $100 billion, reaching approximately $3.56 trillion, with Bitcoin rising over 1.4% to trade above $109,600.
The recent tariff-related volatility had caused a 4% dip in crypto markets, but the temporary truce has restored risk appetite among investors, benefiting cryptocurrencies, especially Bitcoin. Bitcoin's price rally is also supported by strong structural demand driven by inflows into Bitcoin-focused exchange-traded funds (ETFs), which attracted $2.75 billion between May 19 and May 23. Ethereum ETFs also recorded $248 million in inflows during the same period.
Over the past 18 months, Bitcoin has outperformed traditional assets like the S&P 500 by a wide margin, enhancing its reputation as a high-beta asset favored during risk-on cycles. Institutional investors and corporate buyers such as MicroStrategy have played a pivotal role in driving sizable accumulations.
Despite the relief from the tariff postponement, market participants remain cautious, mindful of the potential for renewed volatility given the unpredictability of US trade policies and upcoming critical economic data releases in the US, including GDP and inflation figures.
