Up to this point, the cryptocurrency markets have not reacted as investors anticipated during the Trump Administration. Many had hoped that new regulatory measures and initiatives such as a Bitcoin Strategic Reserve would significantly boost prices. However, the results have been the opposite—Bitcoin has declined from peaks above $100,000 at the start of the year, settling into the mid-80,000s throughout much of March.
The correlation of crypto prices with traditional assets, including stocks and bonds, has intensified, particularly in light of ongoing macroeconomic instability. Concerns over tariffs imposed by the U.S. on imports have left Wall Street apprehensive about the potential for a global recession. Consequently, investors are steering clear of crypto assets, which are viewed as relatively high-risk.
“This situation revolves around the market’s ‘risk appetite,’ which continues to wane, creating a divide between crypto assets and gold—the established ‘safe haven’ for investors,” noted an economist and strategist at ADM Investor Services International.
“Central bank forex reserve managers, aiming to lessen their exposure to the dollar, are a significant factor driving this trend.”
As the international financial system becomes increasingly fragmented, investors are on the lookout for alternatives to riskier assets, including the dollar. At present, this search has led them back to gold, which has jumped 18% since the year’s start.
However, this dynamic may shift, according to an adjunct professor from Columbia Business School and author of a guide on blockchain. He suggests Bitcoin could soon establish itself as the new gold.
“The future is uncertain and somewhat unpredictable, due to numerous conflicting factors, especially with both crypto and tariffs being relatively novel concepts. While some argue that crypto is merely a high-risk tech asset vulnerable to selling pressure from tariffs, Bitcoin has, in some circles, been embraced as ‘digital gold,’ with physical gold gaining traction in the wake of tariff announcements. The outcome remains uncertain.”
In essence, economic instability might drive investors toward Bitcoin, mirroring their recent interest in gold.
On a positive note, there is speculation that the effects of tariffs on crypto may already be “priced in,” implying that the worst could potentially be behind us, according to the head of research at a prominent crypto asset management firm.
President Trump is slated to declare U.S. tariffs on Wednesday, April 2, at 4 p.m. ET—a date referred to as “Liberation Day.” Reports indicate that he will outline “reciprocal tariffs” impacting 15 countries that have imposed tariffs on the U.S., including China, Canada, and Mexico.
According to estimates, tariffs have thus far reduced economic growth by 2% this year. Nonetheless, Liberation Day might actually alleviate some of the pain experienced in financial markets. “If we witness a tough but gradually implemented announcement on Wednesday, targeted explicitly at the 15 identified countries, I anticipate that markets will respond positively,” he said.
“Once we navigate this announcement, crypto markets might redirect their focus back to the fundamentally strong factors at play.” He argued that developments like Circle’s IPO wouldn’t occur if institutions lacked confidence in the digital asset landscape and the regulatory environment surrounding it.
Additionally, he believes that tariffs may diminish the dollar’s dominant position, paving the way for competitors like Bitcoin. “Despite short-term price declines, the initial months of this administration have strengthened my belief in Bitcoin’s long-term potential as a global monetary asset.”
He maintains an optimistic outlook, believing Bitcoin will reach new all-time highs this year, despite the ongoing pessimism surrounding current prices. “I wouldn’t have left my job on Wall Street if I didn’t believe Bitcoin will ultimately prevail in the long term,” he asserted.