The role of Bitcoin amid economic turmoil

Market analysis by Inky Cho, Financial Markets Strategist at

If you hold a certain amount of Bitcoin or whether you슬롯사이트re planning to buy some soon, you must be wondering what impact the US tariffs have on the coveted crypto슬롯사이트s price. Undoubtedly, the return of President Donald Trump to the White House arguably marks the most schismatic moment in US politics and geopolitics.

Trump슬롯사이트s reappointment was followed by a deluge of draconic measures, including eerie promises of mass deportations and a series of controversial decisions emanating from Elon Musk, the head of the Department of Government Efficiency (DOGE), has been keeping traders and investors on a string.

The pledge to impose 25% tariffs on imports from Canada and Mexico, and 20% on imported goods from China in his first 100 days in office, made Trump one of the most controversial political figures of the 21st century.

But 슬롯사이트tariffs슬롯사이트 is not the only 슬롯사이트most beautiful word in the English dictionary,슬롯사이트 according to the US President. The word 슬롯사이트cryptocurrency슬롯사이트 also carries particular significance, as he promised to enact a series of deregulation measures aimed at bolstering Bitcoin and altcoins슬롯사이트 value. To that end, he signed an executive order that serves as the foundation for a so-called 슬롯사이트Strategic Bitcoin Reserve슬롯사이트 and a 슬롯사이트Digital Asset Stockpile,슬롯사이트 which will include Bitcoin alongside other cryptocurrencies.

The funds will be held with digital currencies forfeited to the federal government as part of legal proceedings. According to David Sacks, the White House AI and crypto 슬롯사이트czar,슬롯사이트 this reserve will be 슬롯사이트a digital Fort Knox for the cryptocurrency,슬롯사이트 which he likened to the Kentucky military base that stores a significant amount of US gold assets.

Amid a wave of polarizing reaction from crypto enthusiasts, some of whom criticized the government for not taking a bolder stance, while others questioned the transparency of the process.

Sacks has reportedly ordered a full account of the government슬롯사이트s crypto asset reserves, which he estimated at 200,000 Bitcoin alone. But is that enough to turn Bitcoin into a hedge? The answer to this question is more complex.

A Tariff-Led Bitcoin Bull Run in Disguise

The President슬롯사이트s relationship with the crypto space is not entirely free of any conflict of interest. The launch of his name meme-coins $TRUMP and $MELANIA just before inauguration day spited the industry, which through the voice of Danny Scott, CEO of CoinCorner, retorted, 슬롯사이트Trump's comments about not knowing much about the coin back up my opinion that he is making a mockery of the industry. It's a stunt.슬롯사이트

Against this hazy background, the US tariffs cast a somewhat more positive light on the potential of Bitcoin and other crypto assets. Assuming that Donald Trump completes his tariffs슬롯사이트 mandate, immigration policies, and tax cuts, inflation could rise rapidly.

However, this type of inflation will not be a positive sign at all. For example, the cost of German motor vehicles in the US would soar, rushing Americans to open their wallets before the tariffs are enforced. This upsurge in consumer spending could temporarily drive retail sales higher, creating an artificial sense of economic growth.

The early signs of this were seen in December 2024, when the consumer price index (CPI) rose at an annual rate of 2.9%, backed by a lower core inflation. Cryptocurrencies, which unlike safe-haven gold, have a growth component that makes them inherently more sensitive to economic shifts such as inflation spikes and tariffs. And Bitcoin is no exception.

Driven up by 2% as the US CPI data sent mixed inflation signals across , Bitcoin surged $1,500 to $98,000 in 24 hours in December 2024.

Because of its nature, many investors and traders consider Bitcoin a commodity. From this perspective, it슬롯사이트s worth exploring the effect of the recently vehiculated US tariffs on Bitcoin and the broader crypto market.

Near-Term Fears and the Rush for Cash

Near-term, tariffs may hurt Bitcoin슬롯사이트s and the crypto market슬롯사이트s performance, precisely because of its inherent growth-driven characteristic. This is evident in its recent price action. As fear pervades the financial markets, Bitcoin hit a 4-month low amid massive crypto market sell-off.

Photo Credits: File Photo

The crypto market reached a staggering $1 billion in liquidations in the space of 24 hours (between March 10 and March 11), making many traders run for their money. Bitcoin and Ethereum, the largest cryptocurrencies by market capitalization, have been the biggest losers of this downturn.

The main reason behind this mind-blowing price drop is the large movement of cryptocurrency by key players. Mt. Gox, the not-long-ago dominant crypto exchange, transferred tens of thousands of Bitcoin as it settles debts, triggering sell-off fears.

In a chain reaction, an Ethereum whale, who슬롯사이트s been laying low for months, deposited a jaw-dropping amount of ETH into Kraken, adding to the jittery. Another key ETH holder sold a significant portion of its holdings at a loss, potentially to prevent forced liquidation.

Had this not been enough already, Donald Trump슬롯사이트s comments of a looming recession sent shockwaves through the stock and crypto markets. Stock prices and crypto valuations took a tumble as a result, erasing the gains added after the latest US monetary policy update.

Bitcoin also tumbled to a multi-month low briefly amid fears that an impending sharp decline may be ahead, before recovering slightly. Traders must tread with caution and exercise risk management using Stop Loss as the downward trend may continue unless buying pressure returns. This is a typical reaction to political and economic uncertainty triggered by Trump슬롯사이트s tariff policy. But is this all there is to Bitcoin슬롯사이트s path ahead or is there light at the end of the tunnel?

The Bigger Picture: Bitcoin As a US Tariff Hedge

Maintaining its correlation with the NASDAQ at a 40% rate, Bitcoin is currently way below its 72% peak correlation point. Nevertheless, as seen during March 2023, when the banking crisis climaxed, Bitcoin can uncouple and act as a safe-haven asset. This is arguably its paradox, as it can be both highly volatile and a safe haven.

In this context, Bitcoin, unlike Ethereum and other altcoins, can be seen more as digital gold. This polarity across the crypto market is likely to continue, analysts suggest, with Bitcoin acting more like a hedge against economic uncertainty and present-day US tariffs, while altcoins, including Ethereum, remain tied to the tech sector and implicitly, tech-heavy NASDAQ.

Food for Thought

Tariffs shape economies as new trade alliances could be formed and trade wars likely to erupt in various parts of the world. In the short term, US tariffs could lead to higher inflation, slower growth, and volatility in Bitcoin and risky assets. In the long term, however, Bitcoin슬롯사이트s role as a hedge against tariffs could increase, especially if tariffs trigger economic instability.

What lies ahead for Bitcoin remains to be seen. Meanwhile, traders will do well to keep abreast of US policy decisions as well as global economic and political developments. This will help them make informed decisions and potentially even enjoy some of Bitcoin슬롯사이트s potential as a hedge.

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