The recent announcement by U.S. President Donald Trump regarding high tariffs on imports from Canada, Mexico, and China has caused chaos in the financial markets. The cryptocurrency market, operating 24/7, was the first to react. Bitcoin (BTC) fell over 10% to $91,500, while Ethereum (ETH) dropped 36% from its weekend high to $2,100. Solana (SOL) also saw a 24% decrease to $176.

Institutional demand supports Bitcoin

Despite the sudden downturn, analysts believe Bitcoin can demonstrate long-term resilience. Analysts at Bernstein emphasize that while Bitcoin shows short-term correlation with risk assets, in the long run, it remains a store of value compared to the U.S. dollar.

In January 2025, U.S. spot Bitcoin ETFs saw a net inflow of $5.3 billion, aligning with the annual forecast of $70 billion. Additionally, MicroStrategy's purchase of $2.5 billion worth of BTC and further funding plans indicate that institutional demand remains strong.

Bernstein analysts also note that the U.S. government is considering Bitcoin as part of the national reserve strategy. If SAB 121 is rescinded, banks may be allowed to offer BTC custody and lending services, which could further support adoption.

Could tariffs benefit Bitcoin?

Jeff Park, Head of Bitwise Alpha Strategies, argues that the U.S. government is using tariffs as a temporary tool to facilitate indirect interest rate cuts and a weaker dollar. According to Park, this strategy could trigger a strong bull run for Bitcoin.

By increasing demand for long-term U.S. bonds and reducing dollar reserves, the U.S. may inadvertently push Bitcoin and other risk assets higher. However, Alex Krüger, another analyst, warns that such policies could negatively impact the U.S. economy, adding further pressure on Bitcoin.

Former Treasury Secretary Lawrence Summers criticized Trump's trade policy, calling it economically irrational. Meanwhile, hedge fund manager Daniel Loeb argues that they are part of a broader strategic agenda.

The future outlook for Bitcoin

Despite the ongoing volatility of the market, analysts at Bernstein predict that Bitcoin could reach $200,000 by the end of 2025, thanks to strong institutional demand. As the market navigates uncertainty, long-term investors remain optimistic about Bitcoin's price trajectory.

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