In the face of escalating trade disputes leading to harsh tariffs, I, as an analyst, find that investors are reconsidering their approach towards conventional financial assets. Interestingly, Bitcoin – initially perceived as a volatile digital experiment – is now gaining attention as a potential safeguard against inflation, currency depreciation, and economic instability.
In a world hit by tariffs, might Bitcoin, due to its limited supply and lack of control by central banks, emerge as the preferred safe asset?
Bitcoin’s Rising Appeal Amid Tariff Turmoil
April saw significant fluctuations in the world economy due to Trump’s imposition of tariffs and the U.S. government’s decision to put a 90-day hold on enacting this policy.
Recently, U.S. President Donald Trump announced a tough tariff strategy, mainly focusing on 15 nations where the U.S. trade balance is skewed. This move has sparked turmoil across the global economy and negatively impacted most significant financial markets, such as cryptocurrencies.
Instead, the Trump administration granted a 90-day delay in enforcing the policy to those nations that hadn’t responded with countermeasures to the U.S.’s tariff increases.
Starting from April 1, the Bitcoin market experienced an increase of approximately 2.46%. This surge in value suggests that Bitcoin might be garnering more interest as a protective asset amidst economic uncertainty resulting from trade disputes and tariffs.
In simpler terms, unlike traditional currencies controlled by central banks and subject to political influences, Bitcoin maintains a set amount and operates independently without any single entity in charge.
It’s noteworthy that studies indicate Bitcoin tends to have a relatively low relationship (under 40%) with conventional investments.
How Tariffs Are Weakening the US Dollar?
To start off this month, the U.S. Dollar Index stood at 104.196. However, since that point, it has experienced a decrease of more than 4.39%.
As an analyst, I’ve observed that initially, tariffs seem to strengthen the U.S. dollar; however, over time, they may negatively impact our country’s exports and potentially harm domestic businesses due to increased costs and reduced competitiveness in global markets.
Bitcoin vs Traditional Financial Assets: A Comparison
This month began with the S&P 500 at approximately $5,598.77, while the Nasdaq 100 stood around $19,179.58. However, since then, both these indices have experienced a decline of more than 5.77% for the S&P 500 and over 4.8% for the Nasdaq.
Meanwhile, it’s worth noting that while we’ve seen a dip in the overall market, Bitcoin has shown a modest increase over the same timeframe, rising by approximately 2.46%. Remarkably, in just the last seven days, its growth has been more significant, reaching a total of 3.1% increase.
This implies that despite market volatility, BTC has shown resilience.
This strengthens the conviction among numerous investors that while sudden tariff impacts might cause temporary decreases in Bitcoin’s price, its enduring allure as a safe haven investment stays robust over the long term.
2024 saw an impressive 121.1% increase in the Bitcoin market, outperforming its 2023 performance where it registered a significant surge of 155.4%.
Initially this year, the market experienced a drop of 11.7%, but surprisingly, in the current quarter, it’s shown a significant increase of approximately 2.72%.
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Can Bitcoin Replace Gold as a Safe-Haven Asset?
Lately, financial expert Peter Schiff has suggested that investors should consider abandoning Bitcoin and, alternatively, look into American gold mining corporations for investment. Known for his strong support of gold, Schiff previously predicted that the value of Bitcoin could sink to a mere $10,000.
Bitcoin is considered a “digital equivalent of gold” by many, but gold remains the dominant safe-haven asset at present.
From April 1st onwards, the cost of gold per ounce has risen by approximately 6.8%. Compared to the Bitcoin market, the gold market has shown better performance over this timeframe.
Despite a growing tendency among investors to favor Bitcoin, it’s important to note that gold tends to hold its ground as the primary choice during times of crisis.
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FAQs
1. As a crypto investor, I’ve often pondered about the impact of tariffs on both the US dollar and Bitcoin. At first, tariffs tend to bolster the US dollar, but over time they can negatively affect exports and businesses. Interestingly, Bitcoin, being unaffected by these tariffs, may thrive as the US dollar weakens due to economic instability caused by trade wars.
2. Regarding the long-term prospects of Bitcoin during trade wars, its low correlation with traditional assets implies that its role as a hedge against market volatility remains attractive, even in the midst of ongoing tariffs and trade disputes.
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2025-04-17 11:25