Key Insights
US President Donald Trump has rolled out a fresh wave of tariffs on the market in recent times.
Tariffs don't just rattle markets. They drive up prices, and higher costs of imported goods can make inflation worse.
Instead of rushing towards crypto, investors have shown a preference for traditionally safer assets like gold.
Investors across the financial markets expect the economic strain to trickle down into every sector, including cryptocurrencies.
Still, the short-term outlook for the cryptocurrency might be shaky, but it remains encouraging in the longer term.
US President Donald Trump has rolled out a fresh wave of tariffs on the market in recent times.
Because of this, the global markets have been on edge, and investors are now bracing for impact.
Investors across the financial markets expect the economic strain to trickle down into every sector, including cryptocurrencies.
So far, these fears haven’t been unfounded.
Bitcoin recently recovered from a crash below the $75,000 zone in the first quarter of the year and is looking at a tough battle between the $100,000 to and mid-$80,000 zones now.
Here’s why this new development could be a possibly bullish narrative for Bitcoin in the long run.
Bitcoin and the Tariff Turbulence
It has been no secret that Bitcoin hasn't been very bullish in price since January of this year.
Since Trump returned to the White House and the cryptocurrency rallied to its $109,000 all-time high, Bitcoin has been in a steady decline towards the $70,000 zone.
Policies initially believed to be crypto-friendly, like the Bitcoin Strategic Reserve and regulatory reform, have failed to boost prices.
Instead, the wider economy has been spooked on several occasions by tariffs and geopolitical tensions.
All of the above have dragged crypto down, alongside stocks and bonds.
Instead of rushing towards crypto, investors have instead shown a preference for traditionally safer assets like gold.
Bitcoin, on the other hand, is still being perceived by many as a high-risk, high-reward asset.
It has become the first asset investors dump during times of market turbulence.
However, there could be more to the story than mere market scares.
Weakening Dollar Strength Could Boost Bitcoin
As the US continues to dole out tariffs against countries like China and Mexico, the financial system around the world is becoming more uneasy.
This spells trouble for the US dollar, considering how it has long been the world’s dominant reserve currency.
The tariffs and trade wars could push other countries to shift away from the US dollar and consider alternatives.
This is where Bitcoin can come in.
Tariffs don’t just rattle markets. They drive up prices, and higher costs on imported goods like construction materials and industrial metals can make inflation worse.
This is exactly what the latest U.S. Consumer Price Index (CPI) data shows.
So far, there has been a 0.5% rise in US inflation, with signs showing that there could be more ahead if the trade war escalates.
When inflation rises, currencies tend to lose value.
In response, investors tend to move their capital into other assets like gold, and more importantly, Bitcoin.
This trend could gain massive traction if inflation worsens, especially as more players enter the crypto space.
Market Volatility Is Creating Opportunities
Trump’s trade war has undeniably caused chaos for the financial markets in the short term.
Bitcoin recently dipped to around $91,200 after the announcement of the 25% tariff on foreign-made cars and metals like iron and aluminum.
However, the remarkable thing about this event is how quickly the crypto market bounced back.
Bitcoin rallied soon after by around 10% in a single day and rallied past the $102,000 zone before stabilizing near $97,000.
The same has happened several more times, with the most recent one being Bitcoin’s dump towards $74,000 and its ongoing recovery to $93,613 at the time of writing.
While this kind of volatility can be hard to process for many investors, it also creates an interesting narrative for long-term investors.
Bitcoin’s price jumping between extremes can be a great opportunity for those who understand the bigger picture.
Another interesting thing about these events is that the worst of them might already be priced in.
The market will likely see a change in stance from the US government, with a well-structured tariff announcement (on specific countries) rolled out in phases.
This event could calm the markets and allow investors to focus on fundamentals again.
Institutions Aren’t Giving Up on Crypto
Amid the short-term price pressure, crypto isn't losing its shine in the eyes of major players.
For example, Circle is currently looking towards an IPO, which could boost its standing in the stablecoin space.
Institutional investment continues to flow into the crypto space and further reinforces the view that crypto has a long-term role to play in the future of finance.
The question remains: Is Bitcoin doomed because of the Trump tariffs? Far from it.
The short-term outlook for the cryptocurrency might be shaky, but it remains encouraging in the longer term.
The tariffs can temporarily weaken the market.
However, they also stir the pot in ways that benefit crypto as a whole.
For now, investors must stay vigilant, as news-driven price swings are likely to continue in the medium to short term.
However, underneath the noise, a strong case is forming for Bitcoin as both a hedge against inflation and a serious contender to the US dollar.
In the end, the Trump tariffs might do a lot more to help than hurt Bitcoin.
