Background
On April 9, 2025, Trump announced that he would impose a 125% tariff on China, while suspending tariffs on 75 other countries for 90 days, reducing them to 10%. This policy triggered reactions in global markets, especially in the cryptocurrency market.
Short-term Impact on Bitcoin Prices
Price Increase:
After the policy announcement, Bitcoin's price surged to $81,000, an increase of about 8%, reflecting the market's positive reaction to the tariff suspension.
Reason: The tariff suspension has reduced concerns about a global trade war, increasing demand for risk assets like Bitcoin.
Long-term Impact on Bitcoin Prices
Uncertainty:
If the 90-day trade negotiations proceed smoothly, global markets may stabilize, and Bitcoin's attractiveness as a safe-haven asset may decline.
US-China Relations:
If US-China trade tensions escalate, Bitcoin may benefit from economic uncertainty, but possible retaliatory measures from China (such as tighter regulations) could affect the Bitcoin network.
US Dollar and Inflation:
If tariffs weaken the dollar or lead to rising inflation, Bitcoin may be seen as a hedging tool, potentially driving prices higher.
Overall Outlook: In the short term, Bitcoin's price may fluctuate between $75,000 and $90,000, depending on the progress of trade negotiations and US-China relations. In the long term, the impacts are complex, and investors need to pay attention to negotiation outcomes and regulatory dynamics.
Short-term Analysis of Bitcoin's Rebound Reasons:
Reducing Uncertainty:
The 90-day suspension of tariffs provides a buffer period for the market, alleviating previous concerns about a global economic slowdown triggered by tariff policies. Bitcoin, as a barometer of market sentiment, benefits from this positive signal.
Attractiveness of Safe-Haven Assets:
While Bitcoin is typically viewed as a safe-haven asset during economic uncertainty, its price is also highly dependent on overall market sentiment. The tariff suspension has boosted investor confidence, increasing demand for BTC.
Impact of Chinese Tariffs:
Despite the increase in tariffs on China to 125%, market focus has shifted more towards the suspensions affecting other countries. However, the tensions between the US and China may bring additional risks in the short term, especially considering China's significant role in Bitcoin mining and trading.
According to Fortune Crypto: Crypto prices make a comeback after Trump announces a pause on most tariffs, investors had sold off crypto assets before the announcement but quickly repurchased, showing the market's sensitive response to policy adjustments.
Long-term Potential Influencing Factors:
Despite the positive short-term reaction, Bitcoin's long-term trajectory depends on multiple factors.
Negotiation Outcomes:
If the 90-day trade negotiations yield positive results, global markets may stabilize, which could reduce Bitcoin's attractiveness as a safe-haven asset. Historical experience shows that prolonged trade uncertainty may drive investors towards decentralized assets like Bitcoin, especially if fiat currencies face inflationary pressures.
Conversely, if negotiations fail or lead to further trade disruptions, Bitcoin may benefit from economic instability.
Evolution of US-China Relations
The 125% tariff on China may trigger retaliatory measures from Beijing, further escalating trade tensions. According to Reuters: Trump tariffs sow fears of trade wars, recession and a $2,300 iPhone, global markets have started to worry about an escalation of the trade war. China's dominance in the Bitcoin ecosystem (accounting for over 50% of global hash power) makes it a key player. If China implements stricter regulations or retaliatory measures, it could disrupt the Bitcoin network and affect its price.
On the other hand, if US-China tensions lead to broader economic instability, Bitcoin may benefit as a hedge.
US Dollar Dominance and Inflation
Trump's tariff policy may weaken the global dominance of the US dollar, especially if it leads to higher inflation or reduced demand for US goods. According to CoinDesk: Why Trump's Tariffs Could Actually be Good for Bitcoin, a weakened dollar may make Bitcoin more attractive because it is priced in dollars and seen as an alternative store of value. If tariffs trigger rising inflation, Bitcoin may be viewed as a tool to hedge against traditional market risks.
Regulatory Environment
The Trump administration has taken a supportive stance on cryptocurrencies, such as proposing the establishment of a Bitcoin strategic reserve. However, if the trade war escalates, the government may tighten regulations on the financial system, including cryptocurrencies, to control capital flows. This could put pressure on the Bitcoin market.
Market Sentiment and Volatility
Current Sentiment: The 'relief' rebound after the announcement shows a temporary increase in investor confidence. However, Bitcoin's volatility remains high, as per The New York Times: Bitcoin Is Down 10% Since Trump’s Global Tariff Announcement, its price is highly sensitive to geopolitical events and market trends.
Volatility Outlook: The 90-day negotiation period may bring further volatility, with investors closely monitoring trade negotiations and US-China relations. Bitcoin's price could fluctuate between $75,000 and $90,000, depending on news dynamics.
Historical Context: The US-China trade war of 2018-2019 led to significant volatility in Bitcoin prices, and if tensions escalate, a similar pattern may reemerge.
Conclusion and Outlook
Trump's tariff decisions have temporarily boosted Bitcoin prices, reflecting the market's positive reaction to the tariff suspension. However, the long-term impact is complex:
Short-term: Bitcoin's price may fluctuate between $75,000 and $90,000, depending on trade negotiation progress and US-China relations.
Long-term: If trade tensions escalate or lead to economic instability, Bitcoin may benefit; if negotiations succeed and stabilize the market, its safe-haven appeal may decline.
Investors should closely monitor:
Progress of trade negotiations between the US and other countries.
Possible retaliatory actions from China and their impact on global markets. The dynamics between the US and China regarding cryptocurrency regulation.
This analysis is based on current market data and expert opinions as of April 10, 2025. The cryptocurrency market is highly speculative, and investors should exercise caution and conduct independent research. $BTC