{"id":42002,"date":"2025-02-05T18:30:27","date_gmt":"2025-02-05T18:30:27","guid":{"rendered":"https:\/\/mycryptomania.com\/?p=42002"},"modified":"2025-02-05T18:30:27","modified_gmt":"2025-02-05T18:30:27","slug":"why-bitcoin-wins-no-matter-the-outcome-of-trumps-trade-war","status":"publish","type":"post","link":"https:\/\/mycryptomania.com\/?p=42002","title":{"rendered":"Why Bitcoin Wins No Matter The Outcome Of Trump\u2019s Trade War"},"content":{"rendered":"

In an escalation of global economic friction, President Trump\u2019s imposed tariffs have roiled financial markets this week, cutting across both equities, Bitcoin and cryptocurrencies. Yet a new memo<\/a> from Bitwise Asset Management suggests that these headwinds might ultimately propel Bitcoin to new heights\u2014regardless of whether Trump\u2019s strategy succeeds or fails.<\/p>\n

At the beginning of the week, the crypto market witnessed a severe sell-off<\/a>. Bitcoin declined by about 5%, while Ethereum and XRP suffered even sharper losses\u201417% and 18%, respectively. The immediate catalyst was Trump\u2019s imposition of a 25% tariff on most imports from Canada and Mexico, as well as a 10% tariff on China. In retaliation, those trading partners announced countermeasures of their own.<\/p>\n

The US dollar reacted by jumping more than 1% against major currencies. That, combined with lingering weekend illiquidity in crypto markets, triggered a wave of forced liquidations as leveraged traders sold into the downdraft. According to Bitwise Chief Investment Officer Matt Hougan, as much as $10 billion in leveraged positions was wiped out in what he described as \u201cthe largest liquidation event in crypto\u2019s history.\u201d<\/p>\n

Despite the dramatic price action, Bitwise\u2019s Head of Alpha Strategies, Jeffrey Park, remains optimistic about Bitcoin\u2019s trajectory. He points to two guiding ideas that shape his bullish thesis<\/a>: the \u2018Triffin Dilemma\u2019 and President Trump\u2019s broader aim to restructure America\u2019s trade dynamics.<\/p>\n

The Triffin Dilemma highlights the conflict between a currency serving as a global reserve\u2014generating consistent demand and overvaluation\u2014and the need to run persistent trade deficits to supply enough currency abroad. While this status allows the US to borrow cheaply, it also puts sustained pressure on domestic manufacturing and exports.<\/p>\n

\u201cTrump wants to get rid of the negatives, but keep the positives,\u201d Park explains, suggesting that tariffs may be a negotiating tool to compel other nations to the table\u2014reminiscent of the 1985 Plaza Accord, which devalued the dollar in coordination with other major economies.<\/p>\n

The Two Scenarios: Bitcoin Wins, Fiat Loses<\/h2>\n

Park argues that Bitcoin stands to benefit under two distinct outcomes of Trump\u2019s current trade policy:<\/p>\n

Scenario 1: Trump Succeeds in Weakening the Dollar (While Keeping Rates Low)<\/strong><\/p>\n

If Trump can maneuver a multilateral agreement\u2014akin to a \u2018Plaza Accord 2.0\u2019\u2014to reduce the dollar\u2019s overvaluation without boosting long-term interest rates, risk appetite among US investors could surge. In this environment, a non-sovereign asset like Bitcoin, free from capital controls and dilution, would likely attract additional inflows. Meanwhile, other nations grappling with the fallout of a weaker dollar might deploy fiscal and monetary stimulus to support their economies, potentially driving even more capital toward alternative assets like Bitcoin.<\/p>\n

\u201cIf Trump can bully his way into the position, there\u2019s no asset better positioned than bitcoin. Lower rates will spark the risk appetite of US investors, sending prices high. Abroad, countries will face weakened economies, and will turn to classic economic stimulus to compensate, leading again to higher bitcoin prices,\u201d Park argues.<\/p>\n

Scenario 2: A Prolonged Trade War And Massive Money Printing<\/strong><\/p>\n

If Trump fails to secure a broad-based deal and the trade war grinds on, global economic weakness would almost certainly invite extensive monetary stimulus from central banks. Historically, such large-scale liquidity<\/a> injections have been bullish for Bitcoin, as investors seek deflationary and decentralized assets insulated from central bank policies<\/p>\n

\u201cAnd what if he fails? What if, instead, we get a sustained tariff war? Our high-conviction view is the resulting economic weakness will lead to money printing on a scale larger than we\u2019ve ever seen. And historically, such stimulus has been extraordinarily good for bitcoin,\u201d Park says..<\/p>\n

At press time, BTC traded at $98,557.<\/p>","protected":false},"excerpt":{"rendered":"

In an escalation of global economic friction, President Trump\u2019s imposed tariffs have roiled financial markets this week, cutting across both equities, Bitcoin and cryptocurrencies. Yet a new memo from Bitwise Asset Management suggests that these headwinds might ultimately propel Bitcoin to new heights\u2014regardless of whether Trump\u2019s strategy succeeds or fails. At the beginning of the […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-42002","post","type-post","status-publish","format-standard","hentry","category-discovery"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/42002"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=42002"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/42002\/revisions"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=42002"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=42002"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=42002"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}