Crypto Markets React to US Tariffs: How Bitcoin Could Benefit
The recent US tariffs imposed on Canada, Mexico, and China have sent shockwaves through global markets, contributing to a sharp downturn in crypto prices. However, some analysts believe that this could be a significant opportunity for Bitcoin.
President Donald Trump’s tariffs have been described as a strategic lever, designed to influence foreign governments’ dollar reserves and US Treasury holdings. According to Jeff Park, Head of Alpha Strategies at Bitwise, this strategy is connected to the Triffin dilemma, an issue tied to the US dollar’s role as the world’s reserve currency.
“The U.S. wants to keep borrowing cheaply, but at the same time, it needs to weaken the dollar and rebalance trade deficits. That’s the paradox, and tariffs are being positioned as an indirect tool to force movement in that direction.”
Park believes that if successful, tariffs could set the stage for a modern version of the 1985 Plaza Accord, which would encourage trade partners to shift from short-term Treasury holdings to longer-duration debt. This could help stabilize the US debt market while facilitating a controlled depreciation of the dollar.
Bitcoin’s Role in an Era of Monetary Realignment
If the US weakens the dollar while maintaining low borrowing costs, financial conditions could become more favorable for risk assets like Bitcoin. Park explains that Trump’s primary goal is to lower the 10-year Treasury yield, which could benefit his financial interests, particularly in real estate.
As tariffs increase costs and slow economic growth in major trade-dependent economies, foreign governments are likely to respond with monetary easing and fiscal stimulus, which could weaken their currencies relative to the dollar. This, in turn, would export inflation back to the US while increasing global liquidity.
Historically, investors seeking protection against inflation and currency debasement have turned to gold, government bonds, and real estate. Today, Bitcoin presents an additional option β a liquid, decentralized store of value that operates outside government control.
Expert Perspectives: How Tariffs Could Reshape the Crypto Market
Industry experts believe that the recent market drop is primarily an overreaction, but warn that its long-term impact depends on broader economic conditions. Some see the sell-off as a temporary reaction, while others argue it signals deeper economic changes that could reshape crypto’s role in global finance.
Kevin He, Co-founder of Bitlayer Labs, believes that if trade tensions escalate into a recession, institutions may cut exposure to high-risk assets like crypto, but Bitcoin could also attract more safe-haven demand.
Min Xue, Investment Partner at Foresight Ventures, also sees the sell-off as an emotional response rather than a sign of a prolonged downturn.
Experts argue that tariffs could trigger structural shifts in crypto markets, from mining dynamics to liquidity flows. Daria Morgen, Head of Research at Changelly, believes that Trump’s economic policies may push more investors toward decentralized assets.
Rahul Suri, Founding Partner at Ghaf Capital, warns that higher operational costs may push smaller miners out of the market, affecting network security and transaction fees.
What to Expect Next?
The impact of tariffs on crypto is still unfolding, but several key trends are emerging. Short-term volatility is likely, with Bitcoin reacting to broader market uncertainty. However, if inflation rises or global liquidity tightens, crypto could gain traction as a hedge against economic instability.
While the long-term outlook remains strong, overleveraged traders and those betting on immediate rebounds should tread cautiously β macroeconomic shocks could still reshape the playing field.
Trade wisely and never invest more than you can afford to lose. Stay up-to-date with the latest crypto news and trends on Global Crypto News.