US President Donald Trump’s trade policies will create worldwide macroeconomic turmoil and short-term financial crises that will ultimately lead to greater adoption of Bitcoin (BTC) as a store of value asset, according to Bitwise analyst Jeff Park.
Economic instability from the trade war will cause governments to adopt inflationary fiscal and monetary policies, which will further debase currencies and lead to a worldwide flight to safety in alternative stores of value, like Bitcoin, Park argued.
This increased demand for BTC will drive prices much higher in the long term, the analyst concluded. In an X post on Feb. 2, Park predicted the immediate impact of a trade war:
“The tariff costs, most likely through higher inflation, will be shared by both the US and trading partners, but the relative impact will be much heavier on foreigners. These countries will then have to find a way to fend off their weak growth issues.”
Despite the Increased demand for Bitcoin as a store of value against rapidly depreciating fiat currencies driving BTC prices higher in the long term, global financial markets would feel the short-term pain and wealth destruction of the trade war, according to Park.
Bitcoin hit with short-term price shock due to Covid-19 in March 2020 before rallying to all-time highs during the 2020-2021 bull market. Source: TradingView
Related: Trump ‘Liberation Day’ tariffs create chaos in markets, recession concerns
Global markets feeling the short-term shock
Tariffs are “stagflationary for the world as a whole,” economist and hedge fund manager Ray Dalio wrote in an April 2 X post. Tariffs tend to be more deflationary for the levied goods producers and more inflationary for the importing country, Dalio added.
He concluded that the level of debt and trade imbalances will ultimately lead to a global financial shift that changes the established monetary order.
The US stock market experienced a dramatic sell-off in the wake of sweeping trade tariffs from the Trump admin. Source: TradingView
“If these trade tariffs do lead to a massive trade war, it is going to be very ugly for the whole world,” Coin Bureau founder and market analyst Nic Puckrin told Cointelegraph in an interview.
The analyst said the US economy has a 40% chance of a recession in 2025 amid fears of a lengthy trade war and the macroeconomic uncertainty brought on by protectionist trade policies.
No pain, no gain: Short-term shock to drive asset prices higher long-term?
Asset manager Anthony Pompliano recently speculated that the US president is deliberately crashing capital markets to force interest rate cuts and lower the costs of servicing the US national debt.
Interest rate on the 10-year US Treasury Bond has come down since the start of Trump’s second term. Source: TradingView
The interest rate on 10-year US Treasury bonds declined from approximately 4.66% in January to the current rate of 4.00%.
Pompliano also concluded that while the current US administration’s policies will create short-term pain, the effect of lower interest rates will encourage borrowing and drive risk-on asset prices higher in the long term.
Magazine: Bitcoin dominance will fall in 2025: Benjamin Cowen, X Hall of Flame
