The Positive Outlook of Trump’s Tariffs for Bitcoin
As the Trump Administration unveils its tariff policy on “Liberation Day,” there are many concerns about the economy and crypto prices. However, analysts argue that there may be optimistic scenarios ahead.
Key Takeaways:
- Bitcoin has been under pressure since the start of the Trump Administration, contrary to early investor expectations.
- Economic uncertainty and tariffs have prompted shifts towards safer assets like gold, affecting cryptocurrency valuations.
- Some analysts believe that tariffs could weaken the dollar’s priority and ultimately benefit Bitcoin in the long term.
So far, cryptocurrency markets have not reacted as anticipated. Many investors had hoped for a boost from regulatory reforms aimed at aiding Bitcoin. Instead, the price has fallen significantly, plunging from peaks above $100,000 to around $84,000.
Crypto prices now show increased correlation with traditional markets, which have been impacted by economic worries largely attributed to tariffs. “This is all about markets’ ‘risk appetite,’ which continues to deteriorate, driving a distinction between crypto assets and gold,” stated Marc Ostwald, Chief Economist at ADM Investor Services International.
The fragmentation of the global financial and trade landscapes leads investors to look for alternative assets away from riskier options like cryptocurrencies. In the face of this, gold has risen considerably.
Omid Malekan, an adjunct professor at Columbia Business School, suggests that Bitcoin’s status as ‘digital gold’ may soon solidify.
Zach Pandl, the head of research at Grayscale, notes optimism that the worst effects might be behind us. He estimates tariffs have cost roughly 2% of economic growth so far, but potential phased tariff announcements may spark market rallies.
In summary, while the current environment poses challenges, the long-term outlook for Bitcoin remains hopeful as it potentially emerges as a competitive currency against a backdrop of declining dollar dominance.
