Trump Tariffs Boost Bitcoin: Bitcoin, the world’s largest cryptocurrency, may serve as an effective hedge against inflation if President Donald Trump’s tariff-driven trade tensions continue to erode the U.S. dollar’s global supremacy. According to analysis from Messari, a crypto research firm, the ongoing trade tensions could lead to a significant shift in Bitcoin’s relationship with traditional assets.
Potential Decoupling from U.S. Equities
Dylan Bane, Enterprise Research Analyst at Messari, believes that over time, tariffs could lead to Bitcoin decoupling from U.S. equities. “It may increasingly be viewed not as a tech stock proxy or risk-on trade, but as a credible inflation hedge and long-term store of value,” Bane said. This potential decoupling would mark a significant change in how investors perceive Bitcoin.
Current Correlation with S&P 500
Currently, investors view Bitcoin as closely tied to the S&P 500, with its correlation sometimes reaching more than 70%. However, Messari expects this correlation to decrease in the long term as Bitcoin gains recognition as an independent store of value.
Still on Trump Tariffs Boost Bitcoin
Tariffs and the U.S. Dollar
Bane believes that continued tariffs could catalyze structural economic change, leading to a decoupling of Bitcoin from traditional assets. “Tariffs could serve as a catalyst for undermining the U.S. dollar’s role as the world’s reserve currency,” he said. This viewpoint is increasingly echoed by financial leaders, including Larry Fink, the CEO of BlackRock.
Concerns Over Inflation
The news comes amid mounting U.S. concerns over inflation, with Federal Reserve chairman Jerome Powell citing “high uncertainty” amid ongoing trade tensions. Powell’s comments drew the ire of Trump, who said that Powell’s termination “cannot come fast enough!”
Opportunities for Cryptocurrency
Amid these developments, Bitcoin analysts see opportunities for renewed interest in cryptocurrency, especially as an alternative to centralized and traditional monetary systems. “The broader economic uncertainty and institutional distrust that come… could also drive greater interest in crypto more broadly as financial infrastructure not reliant on any single government or monetary authority,” Bane said.
Bitcoin’s Price
Bitcoin is currently trading at a price around $84,000 after surpassing a new all-time high price of $109,000 this January. The cryptocurrency’s price volatility reflects the ongoing uncertainty and debate about its role in the global financial system.
Implications for Investors
The potential for Bitcoin to decouple from traditional assets and serve as an inflation hedge has significant implications for investors. As the global economy continues to evolve, investors may increasingly view Bitcoin as a viable alternative to traditional assets, potentially driving up demand and prices.
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