Donald Trump in his first three months as president sparked trade tensions by announcing tariffs on Canada, Mexico and China, which resulted in unexpected turmoil in the U.S. and global markets.
The consequences of tariffs are relatively fast and are felt in the cryptocurrency market. As of March 8, the U.S. president has withdrawn from some plans to impose tariffs on certain Mexican and Canadian goods, another distortion of the roller coaster of U.S. trade policy, which continues to shake markets.
Singapore cryptocurrency company QCP Capital is in notes. “The cryptocurrency market this week is simply a roller coaster. With the flux of macro conditions, cryptocurrencies remain closely linked to stocks, and price action reflects a broader economic shift.”
The Trump administration has tested the limitations of economic and foreign policy, highlighting the volatility of cryptocurrencies, often seen as high-risk assets, which is the scope of uncertainty.
In a post on X by former U.S. Treasury Secretary Lawrence Summers explain (…) Tariff policies have deducted $2 trillion from the value of the U.S. stock market,” Summers suggested that the measures were “bad-conceived” and that they would undermine U.S. competitiveness.
“No wonder Wall Street’s fear scale has increased by one third.”
Volatility Index (VIX) price action. Source: Yahoo! finance.
While tariffs and Trump’s marketing policy announcements may create a sense of impending doom, their impact on the future of the cryptocurrency sector remains. Eugene Epstein, head of trade and structured products at MoneyCorp, said that if a trade war weakens the dollar through inflation, Bitcoin could actually benefit. Investors fleeing fiat currencies may turn to cryptocurrencies, and if tariffs are depreciated by currencies, Bitcoin can serve as a tool for capital flight.
Unlike traditional markets, Bitcoin trades 24/7 and responds immediately to macroeconomic shifts, making it very vulnerable to risk sentiment. “Emotionally, the main drivers of cryptocurrencies will continue to be the status of federal cryptocurrencies and overall risk sentiment. If U.S. stocks continue to decline, it will be difficult to envision a strong crypto market at least in the short term,” Epstein said.
Many in the cryptocurrency community expect Trump to return to the White House Send Bitcoin soarsAnd, initially, it did — from $69,374 up on Election Day to a record $108,786 on Inauguration Day. But since then, BTC has fallen, down $80,000 again in late February and March. Despite the government’s pro-Cretto position, including strategic crypto reserves and plans for market structure reform.
According to the election, cumulative inflows into Bitcoin live ETFs reached record highs, with investors investing more than $10 billion in these tools. data In remote investors. However, increasing attention to potential tariff wars seems to have caused losses to market sentiment and expanded cryptocurrencies.
Bitcoin ETFs have seen a large outflow since early February, as uncertainty is vaguely visible on the broader economic landscape. Meanwhile, safe haven assets such as gold actually have Make a positive response In the tariff war.
Spotted Bitcoin ETF Stream. Source: Farside Investors.
This is not the first time President Trump has imposed a tariff threat as a bargaining chip, and some traders believe that the market will adapt to focus on fundamentals and passivate tariffs as a way to force policy changes among U.S. allies.
That’s why some traders in the industry choose strategies that are not just based on tariffs. For ABRA trade chief Bob Walden, the tariffs are just “headlines” that affect short-term investor sentiment but will not change the basic conditions of the market.
“To me, tariffs are red herring. It’s something Trump uses as bargaining chips, and I don’t think they mean cryptocurrencies. They initially caused a gradual decline in trend – probing captured a market that has long been at its highest level and sought exciting moves – but it’s a correlation, not a causal relationship.”
Related: 3 Reasons for Bitcoin Sold on Trump Tariff News
Walden pointed out that Trump’s fiscal austerity plan is the real driving force for the crypto market.
“That’s what everyone is looking at in the Tradfi space. Tariffs are just another piece of the fiscal tightening transactions that are happening in the global market, and in fact, there are more reasons for cryptocurrencies, because fiscal tightening means less cash to deploy.”
This article is for general information purposes and is not intended to be considered legal or investment advice. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent Cointelegraph’s views and opinions.
