The cryptocurrency market experienced a notable surge on Thursday, with Bitcoin soaring to nearly $82,000, fueling optimism across digital assets. This rally was fueled by improving investor sentiment, triggered by U.S. President Donald Trump’s unexpected reversal on tariff policies. The shift brought a wave of relief to global markets, igniting bullish momentum not only in crypto but also in traditional equities.

XRP was one of the standout performers, breaking through the $2 threshold for the first time in months. Ethereum (ETH) also saw a significant uptick, gaining 12%, while Dogecoin (DOGE), Cardano (ADA), Solana (SOL), and Binance Coin (BNB) all climbed by approximately 10%. Overall, the cryptocurrency market capitalization surged by 6%, as renewed optimism spread across digital assets. The CoinDesk 20 Index, which tracks the top cryptocurrencies, recorded a 7% daily gain, underscoring the broad-based positive momentum.

The rally followed Trump’s decision to reverse the steep tariff hikes that had been introduced on most of the U.S.’s trading partners. Tariff rates were returned to a baseline of 10%, with the exception of China, where a 125% tariff was imposed due to escalating geopolitical tensions. This policy shift was widely seen as an effort to mitigate concerns about a global recession, which had been fueled by the previous tariff increases and the retaliatory measures taken by other nations.

The global financial markets responded positively to the announcement. U.S. equities experienced their strongest rally since the 2008 financial crisis. The S&P 500 surged by 9.5%, and the Nasdaq 100 skyrocketed by 12%, fueled by investor optimism that upcoming trade talks might prioritize diplomacy over confrontation.

This positive sentiment extended to the crypto futures markets, where over $350 million in short positions were liquidated—the highest daily total since early March. This massive liquidation marked a sharp recovery from earlier in the week, when Bitcoin briefly dropped to $75,000. As is often the case, such widespread short liquidations are viewed as a potential market bottom, signaling that a new bullish phase could be on the horizon.

Among mid-cap tokens, several smaller projects caught the eye with impressive gains. Bittensor (TAO), Sonic (S), and Flare (FLARE) each rose by as much as 30%, reflecting a revived risk appetite among investors eager to capitalize on perceived undervaluations following recent market corrections.

Despite the optimism, experts are urging caution. Jeff Mei, COO of crypto exchange BTSE, emphasized that while the rally was driven by hopes of new trade agreements between the U.S. and other nations, uncertainties remain. “While the policy shift may ease immediate fears, the ongoing tariffs on China and their potential long-term implications on global trade flows are still major risks,” he said.

Jupiter Zheng, a partner at HashKey Capital, suggested that the rally could signal a local market bottom. “The optimism stems from the belief that we’re past the worst of it. However, risks such as China’s retaliatory actions remain, and it’s too early to declare a lasting recovery,” Zheng noted. He also pointed to positive regulatory developments in the U.S. as a potential tailwind for the crypto sector, suggesting that, if the market remains stable, we could see continued momentum in the months ahead.

Overall, the current crypto rally appears to be driven by a combination of macroeconomic factors and technical indicators. While it’s clear that markets are rebounding, caution is still necessary, as the landscape remains fraught with uncertainties. If the favorable conditions persist and no major shocks occur, the road ahead for digital assets could hold further promise.