Dogecoin Jumps 7% as Bitcoin and XRP Rally Briefly Amid Optimism Over Trade War De-Escalation

ALSO: AI tokens held steady despite a key technology backer warning that investments in the sector are outpacing demand.

Key Takeaways:

• Dogecoin and other memecoins surged amid market optimism driven by expectations of softer U.S. tariffs and the Federal Reserve’s plan for two rate cuts in 2025.

• As speculative assets, memecoins tend to respond sharply to broader crypto trends, attracting retail traders seeking high-risk, high-reward opportunities.

• Despite concerns about a potential bubble in the U.S., AI tokens have remained stable, with NEAR Protocol and Story’s IP token showing positive momentum.

Dogecoin (DOGE) surged 7% on Tuesday as major cryptocurrencies experienced a relief rally, fueled by expectations that upcoming U.S. tariffs on April 2 may be less severe than initially anticipated.

Reports suggest that President Donald Trump’s proposed “reciprocal tariffs” could be more selective, with certain countries receiving exemptions and existing metal levies potentially remaining unchanged.

The tariff announcements in February rattled markets, causing a broad sell-off in both stocks and cryptocurrencies. Bitcoin (BTC) tumbled 17.6%, falling below $80,000 from its January peak.

Last week, the Federal Reserve adjusted its economic outlook, raising inflation forecasts while lowering growth projections—likely influenced by Trump’s trade policies. However, the Fed characterized the inflationary impact of tariffs as temporary and reaffirmed plans for two rate cuts in 2025, providing support for risk assets.

The prospect of milder tariffs has fueled market optimism, with memecoins leading the rally. DOGE, Pepecoin (PEPE), Mog (MOG), and Floki (FLOKI) have all surged over 5% in the past 24 hours, pushing the meme sector up 5.6% on average, according to CoinGecko data.

This outpaces gains in major cryptocurrencies, as Bitcoin (BTC), Solana’s SOL, and XRP climbed around 3%, while the broad-based CoinDesk 20 (CD20) index rose 2.7%.

Memecoins tend to act as high-beta plays, often rising sharply when Bitcoin or Ethereum see gains due to their speculative nature and sensitivity to broader market trends. Retail traders frequently view rebounds in major assets as a sign of bullish sentiment, turning to memecoins for their higher-risk, higher-reward potential, given their lower prices and rapid movement.

AI Tokens Remain Steady Amid ‘Bubble’ Concerns

Meanwhile, AI-related cryptocurrencies have remained stable despite growing concerns about a potential bubble in the sector. The category has risen 4.5% in the last 24 hours, per CoinGecko data.

Alibaba’s Joe Tsai recently expressed caution, stating at an HSBC conference in Hong Kong that he sees early signs of a bubble. “I start to get worried when people are building data centers on spec. There are a number of people coming up, funds coming out, to raise billions or millions of capital,” Tsai noted.

According to Tsai, investment in AI appears to be outpacing actual demand, raising concerns about sustainability in the sector.

NEAR Protocol, the largest AI-focused token by market cap, is trading flat today but has gained 14% over the past week. The market continues to respond positively to news that Coinbase and major AI companies are collaborating on the development of AI agent technology.

Meanwhile, Story’s IP token remains strong, rising 8% on the day. The project has been securing high-profile intellectual property from Hollywood and K-pop artists to be monetized on its blockchain. Story positions itself as a solution for rights holders to navigate the AI era by providing a streamlined framework for licensing their content for AI training.