Trump reignites the trade war with China, causing turbulence in the crypto markets. PayPal encounters a major malfunction with its stablecoin PYUSD, resulting in millions of unexpected tokens. Meanwhile, Germany considers abolishing the tax exemption for long-term cryptocurrency holdings, shaping the global crypto landscape in a dense week.
The reactivation of the trade war between the United States and China by Donald Trump has sent shockwaves through traditional financial markets, and the crypto sector hasn’t escaped unscathed. Bitcoin has experienced increased volatility with movements exceeding 4% during trading sessions, reflecting investor nervousness in the face of macroeconomic uncertainty.
Trump’s protectionist declarations about new tariffs have strengthened Bitcoin’s appeal as an alternative safe-haven to gold. Trading volumes on Asian platforms jumped by 18% in the 48 hours following the announcements, indicating that Chinese investors are looking to protect their assets. This dynamic echoes previous episodes of geopolitical tensions where BTC served as a tool for capital preservation.
Market sentiment remains mixed, however. While some analysts anticipate a continuation of the bullish rally if tensions escalate further, others fear that a global economic slowdown could dampen risk appetite, negatively impacting the most speculative altcoins. Stablecoins are seeing their dominance increase, suggesting a wait-and-see phase among traders.
PayPal faced a major technical incident concerning its PYUSD stablecoin this week. A smart contract error led to the unintentional creation of several million additional tokens, raising legitimate questions about the security and reliability of stablecoins issued by centralized companies.
PayPal’s technical team quickly identified the problem and implemented a fix, but the incident has reignited the debate on the comparative advantages between algorithmic, collateralized stablecoins and those issued by traditional entities. The transparency of smart contracts on public blockchains allowed the crypto community to detect the anomaly before it could generate major systemic consequences.
This event comes at a time when stablecoins are seeking to gain legitimacy with regulators. The total market capitalization of stablecoins now exceeds 170 billion dollars, and each incident of this type fuels arguments from regulatory authorities for stricter oversight. Investors are closely monitoring the market reaction and potential impact on confidence in PYUSD compared to its competitors USDT and USDC.
The tax debate is taking a decisive turn in Germany, where authorities are actively discussing abolishing the rule that allows tax exemption on crypto capital gains after one year of holding. This measure, if adopted, would radically transform the investment strategy of millions of European holders.
Currently, German investors benefit from favorable taxation that encourages long-term holding rather than active trading. Removing this advantage would align Germany with stricter tax regimes like France’s, where crypto gains are systematically taxed at 30%. Exchanges and trading platforms established in Germany are closely monitoring these discussions, as they could significantly alter capital flows.
The potential impact extends beyond German borders. If Berlin adopts this reform, other European countries might follow suit, creating a precedent for EU-level tax harmonization. Local crypto communities are mobilizing, arguing that this measure would penalize innovation and push industry players toward more welcoming jurisdictions like Portugal or Switzerland.
Earn $10 for free in just a few clicks on Bitget right now to easily buy your crypto:
On the same topic:
Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
DISCLAIMER
This article is for informational purposes only and should not be considered as investment advice. Trading cryptocurrencies involves risks, and it is important not to invest more than you can afford to lose.
InvestX is not responsible for the quality of the products or services presented on this page and cannot be held liable, directly or indirectly, for any damage or loss caused by the use of any product or service featured in this article. Investments in crypto assets are inherently risky; readers should conduct their own research before taking any action and invest only within their financial means. This article does not constitute investment advice.
Risk Warning : Trading financial instruments and/or cryptocurrencies carries a high level of risk, including the possibility of losing all or part of your investment. It may not be suitable for all investors. Cryptocurrency prices are highly volatile and can be influenced by external factors such as financial, regulatory, or political events. Margin trading increases financial risks.
CFDs (Contracts for Difference) are complex instruments with a high risk of rapid capital loss due to leverage. Between 74% and 89% of retail investor accounts lose money when trading CFDs. You should assess whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Before engaging in financial or cryptocurrency trading, you must be fully informed about the associated risks and fees, carefully evaluate your investment objectives, level of experience, and risk tolerance, and seek professional advice if needed. InvestX.fr and the InvestX application may provide general market commentary, which does not constitute investment advice and should not be interpreted as such. Please consult an independent financial advisor for any investment-related questions. InvestX.fr disclaims any liability for errors, misinvestments, inaccuracies, or omissions and does not guarantee the accuracy or completeness of the information, texts, graphics, links, or other materials provided.
Some of the partners featured on this site may not be regulated in your country. It is your responsibility to verify the compliance of these services with local regulations before using them.
