As Trump’s Tariffs Unfold, What’s Next for Bitcoin and the Crypto Market?

The recent tariff hikes under the Trump administration are stirring uncertainty across global markets, with cryptocurrencies feeling the ripple effects.

The latest measures include a significant 34% tariff on Chinese imports and a 25% levy on automobiles, creating a challenging environment for investors trying to balance risks and opportunities.

Typically, such tariffs drive inflation and bolster the U.S. dollar by making imports more expensive. A stronger dollar usually exerts downward pressure on cryptocurrencies as investors flock to traditional safe-haven assets. However, if economic instability persists, Bitcoin’s reputation as a store of value could gain traction, especially if central banks respond with more accommodative monetary policies.

Rick Maeda, a research analyst at Presto Research, noted that the tariffs have already impacted crypto markets, with Bitcoin dropping to $82,000 and Ethereum slipping below $1,800. Despite increased options trading, the market’s implied volatility remained surprisingly stable, indicating that investors are still assessing the longer-term effects.

Enmanuel Cardozo from Brickken pointed out that Bitcoin’s sharp decline from $88,500 to $82,000 shortly after the tariff announcement signals heightened volatility. While institutional investors are still accumulating Bitcoin, retail participants are shifting toward safer assets like gold. Cardozo suggests that in the longer term, tariffs might actually benefit crypto, as inflation concerns and a weakening dollar could make Bitcoin more appealing as a hedge. A JPMorgan survey supports this view, with over half of institutional investors citing inflation and tariffs as key market factors.

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There’s also speculation that the disruption to global trade could accelerate the adoption of stablecoins as a viable alternative for cross-border transactions. Alvin Kan, COO of Bitget Wallet, warned that the tariffs could lead to stagflation—rising prices without economic growth—potentially undermining confidence in fiat currencies. In this scenario, Bitcoin could emerge as a more reliable hedge as the dollar’s global influence weakens.

Ryan Lee, Bitget’s Chief Analyst, noted that the tariffs, ranging from 10% to 49%, have triggered panic selling, causing Ethereum and Solana to drop around 6%. In contrast, stablecoin activity has surged as fear permeates the market. Lee believes that if economic conditions continue to deteriorate, leading to a weaker dollar and potential Federal Reserve easing, Bitcoin might strengthen as an inflation hedge. However, he cautions that altcoins could struggle unless they demonstrate solid fundamentals.

As the market digests the impact of these tariffs, experts remain divided on whether Bitcoin can maintain its appeal as a hedge or whether investors will continue to gravitate toward safer, more stable assets.

Alexander Stefanov