Why might Trump's tariff policy be favourable for Bitcoin?

Author: Benjamin Schiller

Compiled by: Deep Tide TechFlow

With the Trump administration announcing its tariff policy on Wednesday’s “Liberation Day,” many people hold a pessimistic view of the overall economy and cryptocurrency prices. However, analysts say there are ample reasons to remain optimistic.

On March 26, 2025, U.S. President Donald Trump signed an executive order in the Oval Office of the White House in Washington, announcing a 25% tariff on all foreign-made cars.

Image source: Win McNamee/Getty Images

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The price of Bitcoin significantly fell during the Trump administration, contrary to investors’ expectations.

Economic uncertainty and tariff policies have prompted investors to turn to safer assets like gold, affecting the cryptocurrency market.

Analysts believe that tariffs may weaken the dominance of the US dollar, which could be beneficial for Bitcoin in the long run.

So far, the performance of the crypto market during the Trump administration has been vastly different from expectations. Investors had hoped that regulatory reforms and policies like Bitcoin strategic reserves would significantly drive up prices, but the result has been quite the opposite. At the beginning of this year, Bitcoin prices soared above $100,000, but by March, they had mostly fallen to around $85,000.

Cryptocurrency prices are being dragged down due to increased correlation with traditional assets such as stocks and bonds, which are being hit by macroeconomic uncertainty. Tariffs—additional fees imposed by the U.S. on imported goods from other countries—have left Wall Street worried about a global economic downturn. Cryptocurrency investors are moving away from crypto assets, as these assets are seen as relatively high risk.

“All of this is related to the market’s ‘risk appetite’. Currently, the market’s risk appetite continues to deteriorate, creating a temporary split between crypto assets and gold. Gold remains the preferred ‘safe-haven asset,’” said Marc Ostwald, chief economist and global strategist at ADM Investor Services.

“This is largely driven by central bank foreign exchange reserve managers, who are trying to reduce their exposure to the dollar, which has long been a concern for them.”

As the global financial and trade system becomes increasingly fragmented, investors are looking for lower-risk asset alternatives, including the US dollar. Currently, this means turning to gold, which has risen 18% so far this year.

However, this situation may change, said Omid Malekan, a part-time professor at Columbia Business School and author of “The Story of Blockchain: A Beginner’s Guide to the Technology No One Understands,” suggesting that Bitcoin could soon become the new gold.

“I believe the entire future is full of uncertainties, and in some ways, it is even unpredictable, because there are many intersecting factors at play, and both cryptocurrency and tariffs are new fields. Some people think of cryptocurrency as a tech asset that appeals to risk preferences, which could be sold off due to tariffs. However, Bitcoin is seen as ‘digital gold’ in certain circles, and physical gold is rapidly rising in response to tariff news. So which outcome will it be?”

In other words, economic uncertainty may drive investors to turn to Bitcoin, much like they have sought gold in recent months.

Another positive signal is that the impact of tariffs on cryptocurrencies may have already been “priced in,” and the worst may be over, according to Zach Pandl, head of research at Grayscale, a leading crypto asset management firm.

President Trump is expected to announce the U.S. tariff policy on Wednesday, April 2, at 4 PM Eastern Time, also known as “Liberation Day.” Reports suggest that he will unveil “reciprocal tariffs” targeting 15 countries that impose tariffs on the U.S., including China, Canada, and Mexico.

Pandl estimates that tariffs have already reduced economic growth by 2% this year. However, “Liberation Day” may alleviate the most severe pain felt in the financial markets. “If we see a tough but phased implementation statement on Wednesday, focusing on the 15 countries they seem to be targeting, I expect the market to react positively to this news,” Pandl said in an interview with CoinDesk.

“Once we get past this statement, the crypto market may refocus on the fundamentals, which are very positive.”

Pandl pointed out that announcements like Circle’s IPO will not happen unless institutions are confident in the digital asset space and related policies.

In addition, Pandl—an economist who previously worked at Goldman Sachs—believes that tariffs will increase the demand for non-dollar currencies.

“I believe tariffs will weaken the dominance of the dollar and create space for competitors including Bitcoin. In the short term, prices have dropped. However, the first few months of the Trump administration further strengthened my long-term confidence in Bitcoin as a global monetary asset.”

Despite the current market’s pessimistic attitude towards prices, Pandl still believes that Bitcoin will reach new historical highs this year. “If I didn’t think Bitcoin would be a long-term winner, I wouldn’t have left my Wall Street job,” he said.