#TariffsPause

💥Three ways tariffs could upend the crypto market in 2025

Despite the fact that cryptocurrencies play very little role in the ebb and flow of global trade, tariffs have the potential to disrupt them in several profound ways. That's because the equity, debt and crypto markets are more interconnected than many people might assume.

👉Investor sentiment

This Fear & Greed Index briefly dipped below 20 in both March and April, due to all the concerns about tariffs. So the good news, if you want to call it that, is that investors seem to be calming down a bit.

👉Crypto valuations tied to the macroeconomic outlook

At the same time, investors are rethinking how they value cryptocurrencies. During bullish market cycles, investors focus on variables related to blockchain growth — such as new user increases, gains in blockchain transaction activity, or rapid improvements in technical performance. But during bearish market cycles, focus shifts to fiscal policy, monetary policy and macroeconomic data.

As a result, crypto investors are taking a keen interest in macroeconomic data that might offer clues about inflation and where the economy could be headed. They are especially focused on potential moves by the U.S. Federal Reserve. That's because interest rate cuts are perceived as being very bullish for crypto.

👉Crypto as a strategic asset for sovereign governments

If the trade war intensifies, it's possible that sovereign governments around the world will start to view crypto as a strategic asset that can help them achieve certain economic goals. After all, they might be forced to take drastic steps if exports dry up, or if economic growth grinds to a halt. And crypto could give them a very unique policy option.

These Treasury holdings create all sorts of new linkages between the bond market and the crypto market. For example, some have suggested that stablecoins have the potential to push down yields on U.S. Treasury debt, thereby reducing the government's interest costs on its debt.