Could Trump’s tariff war turn crypto into a safe-haven asset?
As trade tensions reignite under Trump’s wavering tariff announcements, global markets are once again bracing for volatility.
The US President’s announcement of his ‘reciprocal’ tariffs last week triggered market chaos.
His surprise move, expanding and intensifying tariffs on a wide range of imports, shook equities, manufacturing and commodities alike.
But in the world of crypto – particularly in the Bitcoin market – some investors see a silver lining amid the chaos.
With traditional indicators sending mixed signals, and fresh macroecomomic disruptions taking centre stage, crypto traders are watching closely to see how Trump’s tariff manoeuvring might reshape the investment landscape, and possibly turn Bitcoin into a leading safe-haven asset once again.
Bitcoin’s price tug of war
Bitcoin’s journey through April has been nothing short of volatile. After briefly hitting $85,000 on 1 April, BTC sharply pulled back to $76,000 following Trump’s tariff announcement last Wednesday.
The news rattled global markets, prompting fears of an escalating trade war that could drag on growth and squeeze liquidity.
However, the impact on Bitcoin was temporary. When Trump partially walked back the tariffs a few days later – pausing them for all but a few key countries – markets bounced back.
Bitcoin surged back to $83,000, and equities followed suit, highlighting just how tightly linked risk assets and global macro trends have become.
Yet despite the rebound, Bitcoin has been unable to reclaim its previous highs. Analysts at Cryptoquant noted that earlier support levels have now turned into resistance, with the $84,000 zone proving to be a technical and psychological ceiling.
Their bull score index, which tracks market strength, shows only one of ten major indicators still flashing bullish. That’s a worrying sign for those hoping for a breakout.
Digital havens
While many investors see tariffs as destabilising, some in the crypto space believe they could bolster the long term case for Bitcoin.
New levies on everything, from steel to electronics, are disrupting global supply chains and prompting retaliatory tariffs.
Consequent rising inflation risks and slower growth forecasts caused a near-immediate uptick in financial uncertainty.
All of this could, ironically, make Bitcoin more attractive to investors seeking alternatives to traditional markets.
“This is the greatest example of why we need blockchain cryptocurrencies”, said Cardano co-founder Charles Hoskinson during a recent conference in Paris. “We shouldn’t live in a world where a handful of leaders can shake the global economy overnight.”
The broader crypto community seems to agree. With central bank independence being tested, and concerns mounting over government overreach, digital assets like Bitcoin are increasingly being viewed not just as speculative investments, but as hedges against systemic risk.
Will the Fed intervene?
One of the lesser discussed risks tied to tariffs is their rippled effect on bond markets.
As Trump’s tariffs stoked inflation fears, US treasury yields began to climb, driven in part by foreign selling and the unwinding of complex basis trades.
These leveraged bets, which totalled nearly $1 trillion, have started to unravel, contributing to market instability.
If the situation escalates further, it could force the Federal Reserve to step in with emergency liquidity measures.
And that, according to traders like Jake Ostrovskis of Wintermute, could be very bullish for Bitcoin.
“If this blows up again, crypto is not going to be able to stand up against it in the short term”, he said. “But if the Fed intervenes, it will probably be the best performing asset.”
This is because Fed liquidity injections tend to weaken the dollar and flood markets with cash – conditions under which Bitcoin has historically flourished.
Policy proposals
Geopolitical instability isn’t the only factor breathing new life into Bitcoin’s safe haven narrative.
Pro-crypto sentiment in US policy circles is also quietly gaining ground.
Republican senator Cynthia Lummis recently floated a proposal for the US to acquire one million Bitcoins, roughly five per cent of total supply, as a strategic reserve asset.
Though still speculative, the proposal suggested that some lawmakers see Bitcoin not just as an investment class, but as a national asset. Even more, as something that could insulate the US from future monetary disruptions.
Elsewhere, other countries facing economic headwinds are gravitating toward stablecoins, which are pegged to the US dollar. These don’t rely on national currencies that may be rapidly depreciating under tariff pressure.
This expanding demand for crypto-based financial infrastructure highlights a growing global appetite for decentralised financial tools.
Will bitcoin break through or stall?
All of this leaves Bitcoin in an ambiguous position. On one hand, it’s benefiting from renewed interest in the wake of major macro instability. On the other hand, however, technical indicators suggest that the rally may be losing steam.
There are signs that the recent bullish momentum could be waning, yet Bitcoin remains well above its rising support line, giving bulls a reason to remain cautiously optimistic.
If Bitcoin breaks through with conviction, a run toward new all-time highs could follow.
But, the alternative could lead to another round of consolidation.
Trump’s tariffs have shrouded digital assets in complexity. But, Bitcoin’s value proposition as a decentralised, inflation-resistant store of value remains clear.