US President Donald Trump’s trade policy creates global macroeconomic turmoil and a short-term financial crisis that ultimately leads to the adoption of Bitcoin (BTC) as a store of value assets, according to Bitwise analyst Jeff Park.
Economic instability from the trade war will allow the government to adopt inflationary fiscal and monetary policy, further shaking the currency and flying globally at valued alternatives like Bitcoin, Park argued.
This increased demand for BTC will increase prices much more in the long term, analysts concluded. In a post on February 2nd, Park predicted the immediate impact of the trade war.
“While tariff costs will likely be shared by both the US and their trading partners, perhaps through higher inflation, the relative impact will be much more heavy for foreigners. These countries must find a way to fend off their weak growth issues.”
According to the park, despite the growing demand as a valuable reservoir for rapidly depreciating FIAT currency, which will increase the price of BTC in the long term, global financial markets will feel the short-term pain and destruction of wealth in the trade war.
According to Covid-19 in March 2020, Bitcoin was a hit with a short-term price shock as it rallied at the highest ever high in the bull market from 2020 to 2021. Source: TradingView
Related: Trump’s “liberation day” tariffs cause disruption in the market, recession concerns
Global markets suffering short-term shocks
Economist and hedge fund manager Ray Dario wrote in the April 2nd X Post, economist and hedge fund manager Ray Dario said tariffs are “a stag of the whole world.” Tariffs are more deflationary for collected goods producers, and the inflation rate in importing countries tends to increase, Dario added.
He concluded that the level of debt and trade imbalances ultimately leads to global financial changes that change the established financial order.
The US stock market has experienced a dramatic sale in the wake of drastic trade tariffs from Trump’s managers. Source: TradingView
“If these trade tariffs lead to a massive trade war, it will be very ugly for the whole world,” Nick Packlin, founder of the Coin Bureau and market analyst, told Cointelegraph in an interview.
Analysts said there is a 40% chance of the US economy in 2025 amid the macroeconomic uncertainty brought about by long trade war concerns and protectionist trade policies.
No pain or profit: Are the short-term shocks to raise asset prices long-term?
Asset Manager Anthony Pipriano recently speculated that the US president was intentionally crashing capital markets, forcing interest rate cuts, and reducing the costs of serving US government bonds.
Over the decade, U.S. Treasury rates have been declining since the start of Trump’s second term. Source: TradingView
Interest rates at the US Treasury fell from about 4.66% in January to the current 4.00%.
Pulliano also concluded that while current US administration policies cause short-term pain, the effects of low interest rates will promote borrowing and raise risk-on asset prices in the long term.
This article does not include investment advice or recommendations. All investment and trading movements include risk and readers must do their own research when making decisions.
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