Bitcoins
The Bitcoin price sank by more than 13.5% over the weekend, dropping as low as $91,201 on Binance. The sell-off followed US President Donald Trump’s announcement of new trade tariffs. The administration levied a 25% tariff on most imports from Canada and Mexico, added a 10% tax on Chinese goods, and imposed a 10% tariff on Canadian energy resources.
While market observers typically view such aggressive moves as a negative for risk assets, one prominent voice at Bitwise Invest sees a wildly different scenario, predicting that these tariffs could fuel a “violent” long-term rally in Bitcoin.
Bitcoins Why Tariffs May Supercharge Bitcoin
Jeff Park, Head of Alpha Strategies at Bitwise Invest, argues that these tariffs cannot be understood simply as a response to trade imbalances but should be viewed against the broader backdrop of the so-called Triffin dilemma. In Park’s words, “The US wants to keep its ability to borrow cheaply, but rid its structural overvaluation and constant trade deficits—enter tariffs.”
He suggests that, by using tariffs as a bargaining chip, the White House is looking to create a new multi-lateral agreement—akin to a “Plaza Accord 2.0”—aimed at weakening the US dollar. This would potentially oblige foreign governments to reduce their US dollar reserves or to hold longer-duration Treasuries, thereby keeping yields low without officially enacting yield curve control.
Park also ties this strategy to the president’s personal incentives. He believes Trump’s “#1 goal” is to drive down the 10-year Treasury yield, in part because cheaper long-term financing would benefit real estate markets. According to Park, such a push for lower yields dovetails with a deliberate move to weaken the dollar—two conditions that, in his view, create a perfect environment for Bitcoin to flourish.
“The asset to own therefore is Bitcoin. In a world of weaker dollar and weaker US rates, something broken pundits will tell you is impossible (because they can’t model statecraft), risk assets in the US will fly through the roof beyond your wildest imagination, for it is likely a giant tax cut will have to accompany the higher costs borne by the loss of comparative advantage,” Park writes.
His thesis is that the “online and onchain” nature of today’s economy will funnel frustrated citizens across the globe toward alternative stores of value—namely Bitcoin. He believes both sides of any prolonged tariff war will discover that BTC offers a refuge from the fallout, leading to what he describes as a much higher price trajectory.
“So while both sides of the trade imbalance equation will want Bitcoin for two different reasons, the end result is the same: higher, violently faster—for we are at war. TLDR: You simply have not yet grasped how amazing a sustained tariff war is going to be for Bitcoin in the long run,” Park claims.
Tariffs As A Risk Asset Drag
Not all analysts share Park’s optimism. Alex Krüger, an economist and trader from Argentina, disagrees with the notion that tariffs of this magnitude inherently favor Bitcoin. He warned that “Bitcoin is mainly a risk asset.”
He added: Tariffs this aggressive are very negative for risk assets. And the economy will take a hit. The tariffs announced are considerably worse than what was expected by the market, as gradual tariffs or delayed implementation were seen as alternatives. So the S&P futures will open deeply in the red tonight and flush.”
In Krüger’s view, Bitcoin remains a high-beta asset often correlated with equity markets. When a major macro shock—like a sudden hike in tariffs—hits, investors typically rotate into safe havens rather than riskier holdings such as stocks or cryptocurrencies. He pointed out that the sell-off in crypto over the weekend might be explained by the market reacting to an “unexpectedly harsh” tariff announcement.
“The hope for crypto is that it has already dropped a lot in anticipation,” Krüger observed, hinting that digital assets may find a local bottom if the initial shock has been fully absorbed. However, he emphasized the persistent uncertainty ahead, including the possibility of retaliation by targeted nations. A swift resolution to the trade dispute could trigger a bounce, whereas an escalation could deepen market jitters.
Krüger also cautioned that the Federal Reserve might turn hawkish if tariffs stoke inflation—an outcome that rarely bodes well for high-growth or risk-prone assets. Still, he hasn’t ruled out fresh all-time highs in equities later this year:
“I still don’t think the cycle top is in, and expect equity indices to print ATHs later in the year. But the probability of being wrong has increased. Particularly on the latter. As I said a week ago, I’ve taken my long-term hat off. This is a traders’ market.”
At press time, BTC traded at $94,000.
Featured image created with DALL.E, chart from TradingView.com
Jake Simmons Read More