Bitcoin Benefits from Trump’s Economic Strategy Amid Trade War

By: Eva Baxter

The evolving trade strategies of President Donald Trump continue to have a pronounced effect on global financial markets, including the prospects for Bitcoin (BTC). According to Jeffrey Park, head of alpha strategies at Bitwise, Bitcoin is positioned for long-term benefits regardless of the final outcome of Trump’s trade policies.

Trump's administration introduced significant tariffs, including 25% on most imports from Canada and Mexico, and 10% on Chinese imports, generating retaliation from affected nations. This move initially strengthened the United States dollar, resulting in over a 1% increase against key currencies. However, this also led to downturns in equity futures and disrupted crypto markets, with Bitcoin and Ethereum dropping about 5% and 17% respectively.

Despite these short-term fluctuations, Park argues that Bitcoin could benefit from Trump's economic strategies in the future. He references the Triffin Dilemma, which points to the challenges the U.S. faces as the issuer of the world’s reserve currency. The strategy being employed includes using tariffs as leverage to possibly reach a multilateral agreement on the dollar's valuation, similar to the 1985 Plaza Accord. This historic agreement saw leading economies collaborate to devalue the U.S. dollar, which ultimately supported American industrial output.

Park's outlook suggests that if Trump succeeds in his negotiations, which may lead to a controlled devaluation of the dollar, Bitcoin could thrive due to lower interest rates encouraging investment in risk assets. Alternatively, if trade disputes persist, the ensuing economic slowdown may prompt substantial monetary stimulus, another factor historically supporting Bitcoin prices. In this environment, Bitcoin remains poised to capitalize on either scenario.