Crypto plummeted amid a tariffs-driven market turmoil this week, and analysts at Nansen believe further escalation between the United States and China represents the worst-case scenario.
Nansen shared their market perspective amid a full-on investor panic, with Bitcoin (BTC) and crypto suffering fresh pain in massive sell-off action. In case of global growth shocks as U.S. versus China tariffs war escalates, another dump will follow.
Already, the “post-Rose Garden announcement” saw global equities plunge, while BTC gave up gains and fell below $75,000 on ‘Black Monday.’
But the analysts also see other scenarios playing out, suggesting that the overall best take for investors is one where patience rules.
A worst case scenario?
Nansen’s Aurelie Barthere wrote in a “The Week After: Market Update” note that market reaction to the tariffs signals a spike in fears around a potential U.S. growth slowdown. Panic intensified after U.S. President Donald Trump announced additional tariffs against China.
In response, China introduced retaliatory tariffs and restrictions on rare earth exports. Trump then threatened an additional 50% tariff hike on Chinese goods.
Nansen says this represents the beginning of the worst-case scenario for risk assets and crypto.
“This is what the beginning of the worst case looks like. It would be growth-negative for every country, and mark the beginning of a global growth shock. We would not touch crypto before deep bear market levels if this scenario unfolds,” the analyst noted.
While that outcome remains possible, Nansen sees a best-case scenario as a potential counterbalance. A de-escalation before April 9, 2025—when reciprocal tariffs are set to take effect—could mark the bottom for Bitcoin.
Although Nansen assigns just a 15% probability to this best-case outcome, analysts say such an event could lead to stabilization across risk asset markets and a sharp bounce for digital assets.
By contrast, the worst-case scenario is given a 30% probability.
Nansen’s base case, however, carries a 55% likelihood. In this scenario, some form of negotiation takes place, and an eventual resolution helps crypto recover. June remains a key milestone, as initially emphasized by Treasury Secretary Scott Bessent.
If this is the case, then markets are likely to remain choppy amid uncertainty. Bitcoin and equities will seesaw as earnings and tariffs fallout dictate sentiment.
As for what may help the markets, the Fed coming to the rescue, Nansen notes.
But only a weaker labor market and “some visible economic deterioration” could force the Fed’s hand. In this case, analysts see patience as the best approach as investors weigh the escalation vs. negotiation space.
