The impact of Trump's recent policy fluctuations on the cryptocurrency market can be analyzed from multiple dimensions, and its uncertainty may trigger the following chain reactions:
1. Risk aversion demand drives crypto asset volatility
Short-term risk aversion sentiment: Traditional stock markets have experienced severe fluctuations (such as the largest increase in the Dow in 16 years), indicating that the market is extremely sensitive to policy changes. Some investors may view crypto assets as alternative safe havens. If U.S. stocks decline again due to policy reversals, Bitcoin may regain its "digital gold" attribute seen during the liquidity crisis in March 2020, but one should be wary of short-term panic selling.
Weakening of U.S. dollar credit: Repeated tariff policies have damaged the nation's credibility, potentially undermining the dollar's reserve status in the long run. Cryptocurrencies, as decentralized assets, may attract investors losing confidence in sovereign currencies. For example, during the China-U.S. trade war in 2018, Bitcoin rose 17% in a single month.
2. Policy arbitrage and market manipulation concerns
Trump-style volatility harvesting: The president releases policy signals in advance via Twitter (such as suggesting to buy stocks), which may give rise to questions of "policy insider trading." Some capital may shift to the relatively lightly regulated crypto market to avoid traditional market manipulation risks. Data shows that on the day of Trump's 2019 tariff tweet, Bitcoin's volatility soared by 40%.
Regulatory arbitrage window: The U.S. government is preoccupied with trade wars, which may delay the legislative process for cryptocurrencies. For instance, during the 2019 Libra hearing, BTC prices surged by 12% against the trend, indicating market opportunities during regulatory vacuum periods.
3. Technological competition under geopolitical economic restructuring
Acceleration of the decoupling between China and the U.S. in technology: The U.S. is using tariffs as a tool in the tech war (such as restricting Huawei), which may force China to accelerate its blockchain innovation. The People's Bank of China's digital currency (DC/EP) testing progress has already outpaced the Federal Reserve, potentially stimulating a global CBDC race and indirectly increasing the attention on crypto assets.
De-dollarization practices: Countries hit by tariffs may seek crypto payment solutions. For example, after being sanctioned in 2014, local Bitcoin trading volume in Russia surged by 300%; recently, Iran legalized cryptocurrency imports to circumvent dollar settlement restrictions.
4. Asset reallocation under recession expectations
U.S. Treasury yield curve inversion warning: An inverted yield curve between 2-year and 10-year U.S. Treasuries typically signals a recession, with Goldman Sachs currently predicting a 45% chance of recession within 12 months. Historical data shows that during the crises of 2008 and 2020, the correlation between Bitcoin and the S&P 500 rose from 0.1 to 0.6, but mid-recession (6-12 months later) often displayed negative correlation.
Institutional allocation demand: Companies like MicroStrategy continue to increase their Bitcoin holdings as an inflation hedge. If the U.S. implements larger-scale quantitative easing to address the recession, the Bitcoin "digital gold" narrative may be reinforced. In 2020, the Federal Reserve expanded its balance sheet by $3 trillion, and BTC saw a 303% increase over the year.
5. Intrinsic response mechanism of the crypto market
Derivatives market hedging: CME Bitcoin futures open interest increased by 15% on days of policy turbulence, showing that institutions are using crypto derivatives to hedge traditional market risks.
Stablecoin safe haven channel: The market capitalization of USDT increased by 5% in a single week during the 2022 geopolitical conflict, reflecting the safe-haven role of fiat-crypto channels. If Trump escalates the trade war, stablecoins may become a new tool for cross-border capital flows.
Phase impact forecast
Conclusion: The crypto market will become a "pressure gauge" for policy turbulence
Trump's capriciousness essentially exposes the fragility of traditional governance systems, and this systemic risk is precisely the soil in which cryptocurrencies were born. Recommendations to focus on:
Change in correlation between Bitcoin and Nasdaq (current 0.8 → a drop below 0.5 indicates a paradigm shift)
Stablecoin on-chain flow (whale address movements may signal policy arbitrage)
Mining power migration (geopolitical conflicts may alter the distribution of mining power, as seen with the exodus of Chinese mining farms in 2021)
Ultimately, the response of the crypto market will depend on the degree of disorder in the traditional financial system—when Trump's "art of the deal" evolves into a global trust crisis, decentralized assets may encounter a historic opportunity window.