How Will Donald Trump's Tariff Policy Direct the Crypto Market?

Bittime - The economic impact of President Donald Trump's tariff policies is back in the spotlight. This time, the policy not only threatens the trading sector, but also the crypto market. 

With increasing economic uncertainty due to new import tariffs, can Bitcoin and Ethereum remain stable? Check out the discussion in this article, OK?

Trump and the New Tariff Policy

According to reports Reuters, President Donald Trump plans to implement tariffs of 25% on imported goods from Mexico and Canada starting March 1. 

This policy is projected to have a broad impact on the global economy, including the digital asset market.

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Kadan Stadelmann, CTO of Komodo Platform, revealed that Bitcoin is often considered a hedge against inflation and economic uncertainty. 

However, with drastic policy changes, Bitcoin and Ethereum price volatility is expected to increase.

Correlation of Crypto Markets and Stocks

Many analysts note the close relationship between stock market movements, such as the S&P 500, and the crypto market. 

This means that when economic uncertainty increases due to tariff policies, Bitcoin prices tend to follow the same pattern as major stock indices.

This phenomenon was clearly visible during geopolitical tensions in the Middle East at the end of last year. At that time, Bitcoin experienced a significant price decline, while the Bitcoin ETF experienced massive outflows. 

A similar situation occurred during the COVID-19 pandemic, where Bitcoin prices moved in tandem with the US stock market.

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Potential Impact of Trump's Tariff Policy on Bitcoin Prices

Tariffs imposed by Trump could increase import costs, raise inflation and trigger a hawkish response from the Fed. With higher interest rates, risk assets like Bitcoin could come under pressure.

Since news of this tariff emerged, the price of Bitcoin has fallen from a peak of US$106,015 (around Rp. 1.73 billion) on January 31 to US$100,701 (around Rp. 1.64 billion) on February 1. 

If uncertainty continues, Bitcoin could fall further to around US$95,000 (around Rp. 1.55 billion).

However, there are other factors that could arrest this decline. The flow of funds into Bitcoin ETFs shows that investors remain optimistic about the future of this digital asset. 

For example, iShares Bitcoin Trust (IBIT) recorded inflows of US$750.9 million (around IDR 12.25 trillion) at the end of January. Meanwhile, total Bitcoin ETF inflows reached US$5.16 billion (around Rp. 84.1 trillion) during January.

Political Support for Bitcoin

Apart from tariffs and monetary policy factors, political support for Bitcoin is also an important factor. 

Senator Cynthia Lummis recently expressed her support for the concept Strategic Bitcoin Reserve (SBR), which aims to acquire one million BTC in the next five years.

If this plan is approved by the US Congress, the Fed, and the President, Bitcoin supply will tighten even more. This has the potential to push Bitcoin prices to new highs in the future.

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Start with registration and identity verification, then make a minimum deposit of IDR 10,000. After that, you can immediately buy your favorite digital assets!

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Also, visit the Bittime Blog for interesting updates and educational information about the crypto world. Find reliable articles about Web3, blockchain technology, and digital asset investment tips designed to enrich your crypto knowledge.

Reference 

FXEmpire, BTC Price Analysis: Tariff Fears Weigh as Bitcoin Eyes $110K Breakout, accessed February 2, 2025.

The Business Times, Trump imposes tariffs on Mexico, Canada and China, risking trade war, accessed February 2, 2025.

TheStreet, How Trump’s incoming tariffs may threaten crypto markets, accessed February 2, 2025.

Author: Y