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In late 2025, talk of sweeping Trump-era tariffs again rattled markets.
Reports surfaced of a 100% tariff on pharmaceuticals (with high levies on trucks and furniture) slated for Oct. 1.
Al Jazeera called it “the harshest trade plan” since last spring’s surprise tariff blitz.
According to Nassim Taleb’s Black Swan theory, such sudden, unprecedented shocks can produce outsized market ripples. Even before the facts were fully known, traders began to panic – a classic reflex.
Incoherent tariff moves can spook the rest of the world, undercutting confidence and sowing fragility.

Markets & Perception: Fear Over Fundamentals

Surprise and narrative matter more than pure logic. In practice, markets don’t like surprises – and they really don’t like trade wars.
Unexpected duties immediately ignite the fear factor: companies delay spending, consumers hesitate on big purchases, and volatility indexes spike.
Emotional momentum can easily overwhelm cold economics.

Crypto’s on-chain nature means sentiment swings often produce nonlinear price moves. Because blockchain capital is instantly reallocatable, even slight shifts in sentiment can trigger significant price movements.
A single headline can set off outsized ripples in crypto markets – even if the real-world impact turns out modest.

Traditional Stocks vs. Crypto Assets

Historically, tariffs have hit traditional markets hard. They raise input costs and squeeze profits, so equity sell-offs are common.
For example, when dramatic China tariffs were floated in early 2025, Wall Street plunged: the S&P 500 fell over 10% in two days and tech-heavy indexes lost even more.

By contrast, crypto has shown mixed behavior. Bitcoin straddles two roles – a volatile tech-like asset and a nascent “digital gold.” In the 2018–19 trade war, Bitcoin soared as stocks fell, climbing from roughly $5,000 to over $12,000. That episode ignited the hedge narrative.
Yet in other instances, Bitcoin fell with risk assets. After Trump’s tariff news in April 2025, Bitcoin dropped to about $76,000 before rebounding above $85,000 within days.

This rebound was telling: even steep sell-offs were soon reframed as bullish long-term stories.
$BTC Bitcoin correlation with stocks has swung wildly, underscoring its dual nature – safe-haven in one moment, high-beta risk in the next.

Flight to Safety: Bitcoin, Stablecoins, and DeFi

In crypto-land, the flight to safety often means stablecoins or tokenized real-world assets (RWAs). Ahead of tariff shocks, investors poured into stablecoins and RWAs as safe havens.

Rising stablecoin supply signals a rush to digital safety.

This mirrors a larger trend: protectionist policies and de-dollarization are boosting demand for non-USD stablecoins, including commodity- or euro-backed coins.

In short many hedge risk not with Treasuries, but with crypto-tokens outside government control.

DeFi could also gain appeal. If trust in banks falters, some may move funds into lending pools and yield farms.
By early 2025, on-chain RWA tokens were already at 17 billion dollars in total cap, showing growing appetite for holding assets in crypto form.

Scenarios for Year-End

- Bullish Scenario – Crypto as Hedge: Tariffs stoke inflation or dollar weakness, and crypto rallies on its scarce supply narrative. Bitcoin and gold-like stablecoins become hedges. Traders pour stablecoins into DeFi for yield or offshore settlement.

- Bearish Scenario – Risk-Off Rout: Tariffs spark recession fears, and crypto behaves like a high-beta asset. Investors dump volatile coins along with tech stocks. Bitcoin may briefly plunge before sentiment resets.

- Persistent Volatility: If tariffs are half-talk and growth holds up, crypto may simply absorb shocks. Prices could swing but end the year little changed. What matters most is perception and narrative momentum, not raw economics.

Tariffs are a classic Black Swan – rare, explosive and hard to forecast – so their crypto impact is inherently unknowable. But crypto’s role as both a risk asset and a hedge means it can swing violently in either direction.

In a world of Black Swans and viral narratives, crypto’s fate may turn on psychology as much as policy.

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