While the crypto market has weathered many storms, Trump’s recent tariff announcements have sent shockwaves through digital assets. The 25% tariffs on Canada and Mexico imports and 10% on Chinese goods hit hard. Bitcoin tumbled from $105,000 to $92,000—a brutal 22.5% drop in just over a month. Ouch. The entire crypto market shed $300 billion in value. Ethereum, XRP, Cardano—all down the drain by 20% or more.
Investors scrambled. They dumped risky assets faster than politicians change promises. Portfolio managers shifted to safer investments. Because who needs digital gold when actual economic uncertainty is pounding at the door? The market sentiment turned sour, fast.
Panic selling took hold as crypto traders abandoned ship, seeking any safe harbor in the economic storm.
But here’s the twist. These tariffs are inflationary. Plain and simple. They make everything more expensive. The Fed, already sweating about inflation, will likely pump the brakes on rate cuts and might even raise rates. Bad news for most investments. Terrible news for non-yielding assets like Bitcoin. At least, that’s the conventional wisdom.
Mining operations are feeling the squeeze too. Chinese-made equipment just got 10% more expensive. Smaller Bitcoin miners might shut down or move operations. Network security could weaken. Transaction fees could rise. Not exactly a recipe for crypto confidence. The increased pressure on miners is especially concerning given that transaction fees will eventually replace mining rewards as all Bitcoins become mined by 2140.
Yet history suggests something different might happen. Bitcoin was literally born during economic uncertainty. It thrives on it. As inflation creeps up and traditional currencies feel the heat, Bitcoin’s fixed supply looks increasingly attractive. It’s like the digital cockroach that survives every economic nuclear winter. Despite current volatility, DarkFost suggests the recent $12B wipeout in open interest could actually benefit Bitcoin’s long-term stability. Trump’s tariff strategy may ultimately validate Bitcoin’s significance in global trade as other countries consider establishing their own Bitcoin reserves.
Meanwhile, regulatory changes are reshaping the landscape. The IRS wants its pound of flesh with 1099-DA reporting. SEC appointees are easing some restrictions. Digital tariffs might even become a thing. Crazy times.
