Bitcoin jumped to $90,500 in early afternoon trading UK time as a relief rally marked the latest turn in a rollercoaster market.
The action on Wednesday followed a crypto surge during the weekend after President Donald Trump proposed adding altcoins to a strategic crypto reserve.
But then the prices of digital assets sank again this week as US economic weaknesses and tariff fears gripped investors.
Meanwhile, traders are looking ahead to the White House’s crypto summit on Friday, which will be attended by industry bigwigs including Michael Saylor, the Bitcoin-loving chairman of MicroStrategy.
Here’s what else is driving optimism, for now:
Trump
Trump’s 25% tariffs on goods from Mexico and Canada spooked investors, sending benchmark stock indexes down.
Those fears eased on Tuesday when Commerce Secretary Howard Lutnick suggested that Trump will “probably” announce a compromise.
“It’s all rather chaotic and hard to navigate, which is pushing up volatility,” wrote Neil Wilson, an analyst at TipRanks.com. “The big question is whether tariffs stay around.”
Germany
Chancellor-in-waiting Friedrich Merz said the country must do “whatever it takes” to boost defence as the Trump administration signals a withdrawal from its alliances in Western Europe.
Germany’s incoming conservative government agreed to overhaul its rules on debt to raise spending on defence above 1% of GDP, with a plan to spend €500 billion on the country’s infrastructure.
“The main point is, Germany can [take on] more debt and the market likes it,” Wilson said in a note to clients.
US economy
Investors are optimistic in the short term even as they digest the longer-term impact of tariffs and tit-for-tat retaliatory actions.
“But we wait to see how much the US is able to withstand the tariff onslaught,” Wilson said.
Data this week showed manufacturers are tightening their investments to guard against Trump’s trade war.
Leading retailers such as Walmart and Target also warned investors about shaky consumer spending, which is rattling confidence in the US economy.
Meanwhile, the dollar is at a three-month low. A report from Deutsche Bank analysts questioned the greenback’s safe-haven status amid lightning-fast shifts in the macro landscape.
“It is hard to overestimate the scale of change taking place in global economic and geopolitical relations in a matter of days,” the Frankfurt-based bank wrote in a report to clients.
Trista Kelley is DL News’ editor-in-chief.