- Bitcoin briefly surged past US$105K on May 12 after the US and China agreed to a 90-day tariff truce, but quickly dropped to US$102K.
- Despite the diplomatic breakthrough, crypto markets declined, with the total market cap falling 3% to US$3.4T.
- The crypto market dipped 3% as the dollar strengthened and stocks rallied. Gold also dropped 3.4%, with traders rotating into equities, reducing demand for traditionally defensive assets.
What could have been a move that should’ve triggered bullish momentum instead left traders scratching their heads.
Bitcoin (BTC) briefly tapped above US$105K (AU$164K) on May 12 —its highest level in over three months —before fading back to US$102K (AU$161K), just as Washington and Beijing announced a 90-day tariff truce in Geneva.
Moreover, the crypto market capitalisation dropped to US$3.4B (AU$5.4B), a drop of around 3%, according to data from CoinGecko.
Related: Ripple and SEC Finally Call Off $1.3 Billion XRP Suit with $50 Million Settlement
Trading War Ceasefire
The pullback caught many off guard, especially considering the broader market interpreted the US–China agreement as a net positive.
Treasury Secretary Scott Bessent said the temporary deal could be extended if talks stay productive, with sticking points including currency intervention, steel dumping, and semiconductor export controls. He noted that these tariffs were the equivalent of an embargo that neither side wanted.
We concluded that we have a shared interest. The consensus from both delegations is that neither side wanted a decoupling.
Scott Bessent, United States Secretary of the TreasuryThe stock market went on a rally, but Bitcoin and gold didn’t. Gold sank 3.4% on the same day, while the US Dollar Index surged to its 30-day high. A stronger dollar and tariff relief boosted confidence in equities, and weakened the case for defensive trades.
Overheated and Outpaced?
The asset rallied 24% in the last month alone. During the same window, the S&P 500 moved up 7% and gold stayed flat. With BTC’s correlation to equities stuck at 83%, the room for further divergence had already narrowed. Traders, sensing the top, chose to lock in profits.
Still, Bitcoin continues climbing the global asset leaderboard. It now outranks silver and Alphabet in market capitalisation, sitting as the sixth most valuable tradable asset worldwide, according to Coinmarketcap.
One metric still working in Bitcoin’s favor is ETF demand. From May 1 to May 9, US spot Bitcoin ETFs absorbed US$2B (AU$3.14B) in fresh inflows, according to data from SoSo Value.
Despite the short-term wobble, Bitcoin is holding above the psychological US$100K level, buoyed by structural demand. The dip may have more to do with macro rotation than any fundamental weakness in the asset itself.
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