Why Tariffs Might Make Bitcoin the Next Mr. Darcy 🤑

by

It is a truth universally acknowledged, that a man in possession of a strong opinion must be in want of an audience. Such is the case with Mr. Jeff Park, the esteemed Head of Strategy at Bitwise, who has declared, with all the confidence of Mr. Collins proposing to Elizabeth Bennet, that tariffs shall be the very catalyst for Bitcoin’s long-term ascension.

This proclamation arrives amidst the recent imposition of tariffs by President Donald Trump, which has sent the crypto market into a state of volatility not unlike the emotional turmoil of a Jane Austen heroine.

The Tariff War: A Tale of Two Currencies

In a missive shared on the platform X on the second of February, Mr. Park asserted that this is his “highest conviction macro trade for the year.” He expounded upon the long-term effects of tariffs through the lens of the Triffin dilemma and Mr. Trump’s economic machinations, as though he were unraveling the intricacies of a particularly vexing social scandal.

The Triffin dilemma, much like the predicament of a young lady with too many suitors, explains the conundrum faced by the United States as the dollar reigns supreme as the world’s primary currency. While this bestows certain financial advantages, it also necessitates the nation’s perpetual trade deficits to supply the globe with dollars.

To remedy this, Mr. Park suggests that the U.S. may seek to weaken the dollar in a controlled manner, akin to the Plaza Accord of 1985, when major economies conspired to devalue the currency as though it were a poorly timed marriage proposal.

According to Mr. Park, tariffs are but a temporary measure to encourage other nations to reduce their holdings of U.S. dollars and adjust their investments in the country’s government debt. He posits that the true objective is to weaken the dollar without explicitly stating so, much like a gentleman’s unspoken admiration for a lady of superior fortune.

The analyst further contends that Mr. Trump’s team intends to lower U.S. bond yields and diminish reliance on foreign capital. He anticipates that the President will pursue this goal with the determination of a suitor vying for the hand of an heiress, thereby rendering Bitcoin a valuable hedge against inflation and currency devaluation.

“As the world enters a sustained tariff war, the demand for Bitcoin will skyrocket,” declared Mr. Park. “Both U.S. investors and foreign market participants will flock to Bitcoin for different reasons, but the outcome remains the same—higher prices, and at an accelerated pace.”

A Short-Term Misfortune, A Long-Term Fortune

Despite Mr. Park’s steadfast belief in the long-term benefits of tariffs for Bitcoin, the crypto markets have suffered a precipitous decline following President Trump’s announcement of new trade taxes on Canada, China, and Mexico.

In response to this news, Bitcoin’s price plummeted toward $90,000 over the weekend, with altcoins bearing the brunt of the downturn. Data from CoinGecko reveals that the cryptocurrency’s price has fallen by 6.3% in the past seven days, with its market cap dwindling to approximately $1.86 trillion.

The broader digital asset market has also experienced a decline of around 11% in the last 24 hours, erasing over $400 billion in value. The sell-off intensified on Monday, driving markets to their lowest levels this year. Coinglass data indicates that more than 700,000 traders were liquidated since yesterday, with total losses amounting to $2.2 billion.

While the short-term reaction has been as severe as a scolding from Lady Catherine de Bourgh, Mr. Park remains resolute in his conviction that the long-term implications are overwhelmingly positive for Bitcoin.

“You simply have not yet grasped how amazing a sustained tariff war is going to be for Bitcoin in the long run,” he concluded, with the air of a man who has just delivered the most profound revelation since Mr. Darcy’s first proposal.

Read More

2025-02-03 16:04