Main Points:
- Temporary U.S.-China tariff rollback boosts risk assets but limits Bitcoin upside.
- Bitcoin (BTC/JPY) briefly surged to ¥15.60 million (＄106,091) on tariff news before profit-taking.
- Dollar strength and rising bond yields capped BTC gains into U.S. trading hours.
- Technical indicators show BTC overbought; key support at $100,000–$101,000 (≈¥14.94 million).
- U.S. Consumer Price Index (CPI) due May 14, 2025, may trigger further BTC profit-taking or renewed buying.
Introduction
On May 12, 2025, a sudden shift in U.S.-China trade policy triggered both optimism and caution across global financial markets. The United States and China agreed to suspend most retaliatory tariffs for an initial 90-day period, reducing U.S. duties on Chinese imports from 145% to 30%, while China cut its rates from 125% to 10% (3). This announcement briefly fueled a risk-on environment, propelling equities and cryptocurrencies higher. Bitcoin (BTC), often touted as digital gold and a hedge against macro uncertainty, rallied sharply in the immediate aftermath but ultimately saw its upside constrained by stronger dollar dynamics and profit-taking ahead of the highly anticipated U.S. CPI report due May 14.
U.S.-China Trade Truce and Market Reaction
Details of the Tariff Rollback
In a joint statement, U.S. Trade Representatives confirmed a truce that suspends additional tariffs imposed in early April, effectively slashing the extra ad valorem duty from 145% to 30% for U.S. imports from China and lowering China’s reciprocal tariffs from 125% to 10% for the same 90-day window. The deal also removes China’s non-tariff countermeasures, including export restrictions on high-tech components, such as rare earth minerals and magnets, imposed after April 2.
Wall Street’s Mixed Take
Wall Street analysts greeted the announcement with tempered optimism. Barclays reversed its recession forecast, projecting modest U.S. GDP growth over the next year, while Apollo’s Torsten Sløk noted the truce reduced recession “tail risk” from 90% to 30%, potentially bolstering investor confidence. However, Allianz’s Mohamed El-Erian and Deutsche Bank’s Jim Reid warned that enduring inflationary pressures and geopolitical frictions could cap long-term upside.
Impact on Risk Assets
Global equity indices surged immediately after the announcement. The S&P 500 erased its year-to-date losses, closing at a ten-week high as the U.S. dollar weakened and bond yields initially fell. Yet, as U.S. trading progressed, yields reversed higher on renewed fears of stickier inflation, prompting a partial retracement in stocks and commodities.
Bitcoin’s Price Movements on May 12
Yen-Denominated BTC Activity
In Tokyo trading, BTC/JPY opened at ¥15,198,182 (＄103,266). Although price action remained subdued for much of the session, the tariff truce news spurred a late rally to approximately ¥15,600,000 (＄106,091)—near a 2.6% intraday gain. However, brisk profit-taking emerged once U.S. markets opened, and BTC retraced all gains by midday in New York.
Dollar-Denominated BTC Dynamics
Bitcoin’s dollar price extended a multi-day pullback as it dipped below $103,000, reflecting traders locking in gains from the prior over-10% rally. Santiment data indicated significant profit-taking ahead of the April CPI release, with short-term dips expected to find buying support if macro conditions remain constructive.
Correlation with Traditional Markets
The interplay between BTC and traditional assets was pronounced. Equity strength on tariff optimism initially lent support to BTC, consistent with its growing correlation to risk-on assets. Yet, rising bond yields weighed on both equities and crypto, revealing bitcoin’s vulnerability to shifts in real interest rate expectations.
Technical Analysis and Key Levels
Overbought Conditions
Technical indicators on Bitcoin’s daily charts flagged overbought momentum entering May 12. The Relative Strength Index (RSI) climbed above 70, suggesting exhaustion in the latest push. As a result, market participants eyed the upcoming CPI report as a pretext to lock in gains.
Critical Support and Resistance
- Resistance: Near-term resistance rests at $109,000, close to the late-April high and a potential record territory.
- Support Zone: Dollar-based BTC dipped to a retracement of roughly one-third of its six-day advance, around $101,000 (≈¥14.94 million). Failure to hold this level may expose the psychological $100,000 floor (≈¥14.79 million).
On the yen side, sustaining above ¥14.94 million (＄101,511) will be critical. A decisive break below could invite deeper sell-offs and test ¥14.79 million (＄100,492) as next support.
U.S. CPI Outlook and Implications for Bitcoin
Expectations for April CPI
Markets anticipate the U.S. Consumer Price Index to show a month-over-month increase of approximately 0.2% and a year-over-year gain of around 2.3%. Analysts warn that any upside surprise could embolden the Federal Reserve to maintain or even hawkishly adjust policy, pressuring risk assets.
Scenario Analysis
- Higher-than-Expected CPI: A headline print above 2.4% YoY could spark a fresh wave of profit-taking in BTC, sending it back toward key supports as investors brace for prolonged Fed hawkishness.
- In-Line or Cooler CPI: A 2.3% or lower reading may reinforce market hopes for a Fed rate cut later this year, potentially revitalizing BTC’s uptrend and paving the way for new highs above $110,000.
Broader Market Impact
The CPI release will not only influence crypto but also global equities, treasuries, and FX markets. A dovish surprise could weigh on the U.S. dollar and Treasury yields, benefiting gold and bitcoin alike. Conversely, hawkish data may bolster the dollar, dampen crypto demand, and trigger rotational flows into traditional safe havens.
Recent Trends Beyond Tariffs and Inflation
ETF Inflows and Institutional Participation
Recent weeks have seen persistent inflows into bitcoin exchange-traded funds (ETFs), underscoring growing institutional adoption. Major providers reported net positive subscriptions, signaling that long-term investors remain committed to bitcoin despite short-term volatility.
DeFi and On-Chain Activity
The broader crypto ecosystem continues to innovate, with on-chain lending protocols recording rising total value locked (TVL). Developers on Bitcoin’s Lightning Network also reported an uptick in channel openings, hinting at increased real-world bitcoin usage.
Regulatory Developments
Regulating agencies in the U.S. and EU are fast-tracking frameworks for digital asset oversight. The U.S. SEC’s recent approval of new bitcoin futures ETFs and the EU’s Markets in Crypto-Assets (MiCA) implementation later this year may provide further clarity, potentially catalyzing another wave of institutional inflows.
Conclusion
The May 12 tariff truce between the United States and China offered a fleeting tailwind for bitcoin, pushing BTC/JPY to ¥15.60 million (＄106,091) and BTC/USD to over $105,000 before profit-taking set in. While the easing of trade tensions mitigates immediate risks, persistent macro uncertainties—particularly the looming U.S. CPI report—are likely to dictate bitcoin’s near-term trajectory. Technical indicators highlight overbought conditions, making the CPI a potential catalyst for further volatility.
Investors will closely watch whether inflation data supports hopes for a Fed policy pivot or reinforces expectations of sustained hawkishness. A cooler-than-expected CPI could reignite the rally, potentially challenging record highs, whereas a hotter print may trigger meaningful pullbacks toward the $100,000/¥14.79 million support zone.
As bitcoin’s market stature evolves amid trade policy shifts and monetary debates, its role as both a risk asset and a macro hedge will continue to be tested. Traders and investors should remain vigilant, balancing technical cues with fundamental catalysts in an increasingly interconnected global economy.
