The cryptocurrency market rebounded sharply on Tuesday, adding over $190 billion to its total valuation, according to Coingecko data. The rally followed US President Donald Trump’s decision to delay tariffs on imports from Mexico and Canada, easing concerns over trade disruptions.
The announcement triggered a surge in major Layer-1 cryptocurrencies, including Ripple (XRP), Ethereum (ETH), and Cardano (ADA), leading the broader market recovery.
Market Turbulence in Early February
The crypto market faced significant headwinds at the start of February, with multiple bearish catalysts dampening investor confidence. A key trigger was the late January legal dispute between DeepSeek and OpenAI, which sent shockwaves through AI-related stocks, erasing over $600 billion from NVIDIA’s market capitalization. The spillover effect created uncertainty around AI-driven blockchain adoption, contributing to broader market instability.
Adding to investor concerns, Trump’s earlier announcement of sweeping tariffs on China, Mexico, and Canada stoked fears of retaliatory economic measures. Expecting rising consumer prices, US investors pulled funds from riskier assets, leading to sharp declines in both equities and cryptocurrencies.
Between January 31 and February 4, Bitcoin (BTC) plunged 11%, briefly falling below $90,000 for the first time in 20 days. The broader market followed suit, with over $2.2 billion in liquidations recorded in the derivatives sector within a single day.
Market Rebounds on Trade Relief
Relief came on Monday when Trump announced a temporary pause on tariffs affecting Mexico and Canada, alleviating inflationary concerns and boosting investor sentiment. While tariffs on Chinese imports remained in place, the decision was enough to restore confidence, fueling a swift crypto market recovery.
Within hours of the announcement, the total market capitalization surged 5.6% to $3.43 trillion. Bitcoin rebounded above $100,000 with a 4.1% daily gain, while Ethereum jumped 8.2% to $2,821.
Layer-1 Tokens Lead the Rally
Leading the resurgence were Layer-1 cryptocurrencies, which outperformed the broader market. XRP saw the biggest gain, surging 13.1% to $2.66. Ethereum followed with an 8.2% rise, while Cardano (ADA) climbed 7.2% and Solana (SOL) advanced 9.3%.
The strong performance of these established blockchain projects suggests investors are prioritizing stability over speculative altcoins amid ongoing macroeconomic uncertainty.
Trading Volume and Market Sentiment
Bitcoin and Ethereum led trading activity, posting 24-hour volumes of $68.1 billion and $51.7 billion, respectively. Meanwhile, stablecoins such as USDT and USDC maintained price stability, indicating that while capital is shifting into major Layer-1 assets, some investors are keeping liquidity on standby for potential market fluctuations.
Outlook and Key Levels to Watch
As traders now await China’s response to US trade policies, market participants are closely watching key support and resistance levels for XRP, ETH, and SOL to gauge the sustainability of the rally. Further developments in trade negotiations and macroeconomic conditions will shape the next phase of price action.
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