The US Trade War and Its Impact On Bitcoin, XRP, and ETH

Bittime - The ongoing trade war between the United States and trading partner countries such as China, Canada, and Mexico has created uncertainty in the global market. One of the most visible impacts is the decline in the price of Bitcoin and other digital assets. 

Despite optimistic long-term projections for Bitcoin prices, currently, many investors are feeling the negative impact of the tariff policies implemented by President Donald Trump.

According to Jeff Park, head of alpha strategy at BitWise, tariffs implemented by the US government could cause Bitcoin (BTC) prices to be “much higher” in the long term. 

This was caused by the weakening of the US dollar in global currency markets and lower yields on government securities. However, in the short term, Bitcoin prices fell by around 7.2% in the past week, showing the market reaction to the policy.

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

Impact of Tariffs on Bitcoin Price

The tariffs announced by Trump aim to correct the trade imbalance by weakening the US dollar. 

According to Park, this will lead to higher inflation, which in turn will encourage investors to look for alternative store of value assets such as Bitcoin. Although there are hopes for BTC price increases in the future, currently, the crypto market is experiencing a significant decline.

It's not just Bitcoin that feels the impact of this trade war. Other digital assets such as XRP and ETH (Ethereum) also experienced significant price drops. Data shows that XRP is down about 16.6% and ETH is down about 11.6% in the last seven days. 

This decline reflects investors' concerns about the economic uncertainty created by the recently announced tariffs.

Also read: Why is Bitcoin CS Down Today? Check out the causes of BTC and Altcoin Dropping

Investors Seek Protection

In situations like these, many investors shift from risky assets to US government securities as a form of protection. A rise in the US dollar and higher yields could spell trouble for the short-term prices of Bitcoin and other digital assets. 

Investors tend to seek safety amidst uncertainty, which could cause the prices of Bitcoin and other digital assets to experience further pressure.

Long Term Outlook for Bitcoin

Even though the price of Bitcoin and other digital assets is currently experiencing a decline, long-term projections remain optimistic. 

If tariffs implemented by the US government succeed in weakening the dollar and increasing inflation, the price of Bitcoin could experience a significant spike. However, for now, investors should be prepared for the volatility that may occur in the digital asset market.

FAQ

What happens to XRP and ETH prices during the trade war? 

During periods of trading tension, the prices of XRP and ETH experienced significant declines. XRP is down about 16.6% and ETH is down about 11.6% over the same time, indicating that altcoins are more susceptible to market fluctuations than Bitcoin.

Is there hope for Bitcoin price recovery in the future? 

Despite the current decline in Bitcoin prices, analysts believe that in the long term, BTC prices may increase as the US dollar weakens and inflation increases, which could encourage investors to turn to digital assets as a hedge.

Is there hope for Bitcoin price recovery in the future? 

Despite the current decline in Bitcoin prices, analysts believe that in the long term, BTC prices may increase as the US dollar weakens and inflation increases, which could encourage investors to turn to digital assets as a hedge.

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Reference

cointelegraph.com, Trump’s trade war will send BTC price ‘violently higher’ — analyst, accessed February 3, 2025.

Author: AWW