US President Donald Trump’s tariffs are expected to significantly increase the price of Bitcoin (BTC) in the long term, according to Jeff Park, head of alpha strategies at BitWise. Park argues that these tariffs will weaken the US dollar in global currency markets and lead to lower yields on US government securities. The ultimate goal of these tariffs is to correct trade imbalances and make US exports more appealing. Park also references the “Plaza Accord 2.0,” which was an agreement in 1985 between the US, Japan, West Germany, France, and the UK to weaken the US dollar. He believes that increased inflation caused by the tariffs will disproportionately affect US trading partners and result in further devaluation of global currencies, prompting citizens of those countries to turn to alternative assets like Bitcoin.
Despite the positive long-term outlook, the announcement of Trump’s tariffs on Canada, China, and Mexico has caused a decline in the crypto markets. Bitcoin’s price has dropped by approximately 7.2% over the past seven days, although it has fared better than most other altcoins. Ether, SOL, and XRP, three prominent altcoins, have experienced even larger declines of around 11.6%, 19.3%, and 16.6% respectively. Investors are concerned that the trade war may lead to increased inflation and have sought refuge in risk-off assets to hedge against macroeconomic uncertainty.
In the short term, the US dollar has shown strength. The US Dollar Currency Index (DXY), which measures the strength of the US dollar against other fiat currencies, has been steadily rising since October 2024. Although there was a slight pullback in January, the dollar has partially regained lost ground in the first few days of February. The rising US dollar and increasing yields on US government securities may pose challenges for the short-term price of Bitcoin and other risk-on assets, as investors shift their focus to safer investments.
Please note that this article does not provide investment advice or recommendations. All investment and trading decisions involve risks, and readers should conduct their own research before making any decisions.