The crypto market's current consolidation near a $3 trillion market cap, with Bitcoin (BTC) hovering around $95,000, feels like the quiet before a storm. Everybody’s holding out for that breakout, that miraculous catalyst to lift us skyward. Are we looking under the right streetlights? Retail, stimulus checks, yield curve inversion. The usual suspects – ETF flows, upcoming labor data – are getting all the attention. What if the real driver is something far less discussed: Donald Trump's renewed commitment to tariffs?
Tariffs A Double-Edged Sword For Bitcoin?
I know, I know. Tariffs. Yawn. But bear with me. Many analysts are stuck on knee-jerk reactions to traditional markets, expecting a nasty risk-off mood that’ll bring Bitcoin with it. Here’s why I think we’re missing a greater, more powerful big picture. Trump's tariff program, despite its "perception problem," as he puts it, could inadvertently become Bitcoin's unlikely savior.
Tariffs are, at their core, inflationary. Second, they raise the cost of imported goods, which gets passed on through higher price increases to consumers and businesses. And what is one of Bitcoin’s main selling points? A hedge against inflation. As federal governments around the world debase their currencies in efforts to combat economic turmoil exacerbated by new tariffs, the appeal of Bitcoin’s fixed-in-supply nature grows. Consider this a flight to safety!
Furthermore, tariffs breed geopolitical instability. Unsurprisingly, trade wars produce winners and losers, fanning flames of discord among countries and further degrading the current world order. In times of uncertainty, these investors turn to safe haven assets. Gold has always been the default option, naturally. But Bitcoin? Bitcoin is now being understood more than ever as digital gold, the uncorrelated asset that during a storm can help you find your center.
We’ve witnessed this charade unfold before, haven’t we? Remember the Cyprus banking crisis? The Greek debt crisis? Each time, Bitcoin experienced a wave of new adopters looking for an alternative to failing central financial systems. Trump’s tariffs have the potential to do this on a far larger scale.
Devaluation Fears: Fueling Bitcoin's Rise?
Think about it. If, for instance, Trump’s tariffs are discriminatory against specific countries, those countries may need to push devalue their currency to compete. This would set off a disastrous chain reaction, as other countries would do the same in order to defend their own economies. The result? A global currency race to the bottom is dragging these standards down. Meanwhile, the demand for assets such as Bitcoin that cannot be manipulated by central authorities is skyrocketing.
Let’s not overlook the “potential deals” Trump says he’s already negotiated with South Korea, India, and Japan. On the surface, these deals seem like a real win. They can produce new trade deficits and exacerbate global economic instability even more. Uncertainty is Bitcoin's best friend.
Fatal Flaw Global Economic Damage?
It's not all sunshine and roses. There’s a very real risk that Trump’s tariffs might backfire spectacularly. If they sink global trade and push the world into recession, every asset class — Bitcoin included — may tank. A major contraction in economic activity can abruptly suppress broader investment appetites. This may catalyze a catch and dump sell off, even including the most innovative non-crypto assets. Humanize the process. Let’s get real, we are dealing with people’s livelihoods.
Whales accumulating LTC with negative funding rates for BTC over the last week may be pointing towards this upward move. As CoinDesk’s Shaurya Asnarkar notes, past performance is not indicative of future results. The world is changing too fast. The market's struggle to exceed its 200-day moving average, currently around $3.01 trillion, is a clear sign that we're not out of the woods yet. Today’s $56 million net outflow from spot Bitcoin ETFs snapped a remarkable eight-day streak of inflows into these funds. This sudden turn of events should be a warning to investors.
So, where does that leave us? Bitcoin trading sideways in a range of $93,000–$95,000 since the end of April. Now, we’re all in a dangerous holding pattern, waiting for the next shoe to drop. The expected data releases on the labor market might very well catalyze some short-term adjustments. In the long run, much bigger things seem poised to determine the fate of Bitcoin, namely the continued trade war and its impact on the world economy.
Ultimately, Trump’s tariff gambit is a high-stakes gamble indeed, not only for the global economy, but for Bitcoin too. Perhaps this will be the final spark that launches Bitcoin to the mooned heights everyone’s been waiting for. Or, it could be just that fatal flaw that brings the whole system crashing down. Only time will tell. One thing is certain: we need to pay attention. The stakes are simply too high to take that risk.
