I. Short-term market response: Decreased risk appetite and price volatility
1. Risk aversion dominates capital flows
The tariff policies implemented by the Trump administration since January 2025 (such as a 10% base tariff on imported goods and high additional taxes on specific countries) have heightened global economic uncertainty, leading investors to turn to traditional safe-haven assets (such as gold), while Bitcoin, as a high-risk asset, was sold off. Gold saw a 23% increase by 2025, while Bitcoin fell more than 10% during the same period. The total market capitalization of the crypto market evaporated by nearly 1 trillion USD from the January peak, with Bitcoin dropping by 19.1% and altcoins like Ethereum suffering even greater losses.
2. Increased correlation with U.S. stocks
The correlation between Bitcoin and the Nasdaq index rose to 0.74 after the tariff escalation, indicating that in the short term, it resembles a risk asset rather than 'digital gold'. The sharp decline in U.S. stocks (S&P 500 down 17.1%) led to selling pressure on Bitcoin. Additionally, institutional investors reduced their Bitcoin holdings due to risk balancing needs, further exacerbating the decline.
3. Liquidity tightening and capital outflows
After the announcement of tariff policies, Bitcoin ETFs saw a net outflow of $8.7 billion in a single day, indicating a lack of short-term confidence in crypto assets. Gold ETFs and safe assets like the dollar became safe havens for capital.
II. Long-term structural impacts: The dollar's status and potential opportunities for Bitcoin
1. Erosion of the dollar's dominance
Analysts believe that tariff policies may long-term undermine the dollar's credibility as the global reserve currency, especially under the trend of central banks reducing dollar exposure, with Bitcoin as a decentralized asset potentially benefiting from diversification demand. For example, Columbia Business School professor Omid Malekan pointed out that Bitcoin may replace gold as a 'store of value' tool.
2. Value storage logic in a stagflation environment
If tariffs continue to drive inflation higher (e.g., U.S. PCE price index up 2.5% year-on-year), while economic growth slows (J.P. Morgan predicts a 60% chance of recession), stagflation risks will enhance Bitcoin's anti-inflation narrative. Historical data shows that Bitcoin performed strongly during the high inflation period of 2022; if inflation spirals out of control in the future, its appeal as a hedging tool may rebound.
3. Policy-driven institutional trends
The regulatory relaxation policies promoted by the Trump administration (such as support for Bitcoin mining and expanding ETF products) may attract more institutional capital. Although suppressed by the trade war in the short term, in the long run, compliance and financial product innovation (such as Circle's IPO plan) will enhance market depth.
III. Interaction between macroeconomics and policy
1. The Federal Reserve's dilemma
Tariffs raise import costs, exacerbating inflationary pressures (1-year inflation swaps rise to 3%), but recession risks (Fitch predicts a 1% drop in GDP) force the Fed to consider rate cuts. If monetary policy shifts to easing, Bitcoin may benefit from increased liquidity, as predicted by BitMEX founder, potentially reaching $250,000 by the end of 2025.
2. Hidden concerns of global trade chain restructuring
The U.S. imposing a 54% comprehensive tariff on China (10% base + 34% targeted) may raise corporate costs and compress profits, indirectly affecting the crypto market. For example, restrictions on Chinese mining machine exports may increase mining costs, leading miners to sell Bitcoin.
IV. Evolution of market structure and correlations
1. Periodic strengthening of risk asset properties
The correlation between Bitcoin and the S&P 500 rose from -0.32 to 0.47 after the escalation of the trade war, indicating that in the short term, it is difficult to escape the framework of traditional risk assets. However, in the long run, its decentralized characteristics and technological advantages (such as fixed supply) may restore its independence.
2. Competition and complementarity between gold and Bitcoin
Gold dominates in safe-haven demand (58% of fund managers prefer gold, only 3% choose Bitcoin), but Bitcoin's scarcity (limited to 21 million coins) and divisibility provide the potential for it to surpass gold in the long term. If Bitcoin's market capitalization reaches the same scale as gold (21 trillion USD), its price may exceed 1 million USD.
V. Conclusion and Outlook
In the short term, tariff policies suppress Bitcoin prices through risk appetite, liquidity contraction, and strong correlation with U.S. stocks; however, long-term structural factors (weakened dollar credibility, stagflation risks, institutional trends) provide potential upward momentum. Investors should focus on the following variables:
Timing of the Federal Reserve's monetary policy shift: If a rate-cutting cycle begins, liquidity injection may catalyze a rebound.
Inflation and growth balance: Can Bitcoin's hedging properties be reconstructed in a stagflation environment?
Regulatory policies take effect: Will the Trump administration fulfill its promise to relax crypto regulations, promoting market institutionalization?
Overall, Bitcoin faces a pattern of "short-term volatility, long-term differentiation" in 2025, with its price fluctuations deeply embedded in the dual narratives of global trade policy and macroeconomic evolution.
