Thomas Daniels
Analysts caution that growing trade disputes might undermine the current financial system’s underpinnings as inflationary pressures increase and geopolitical tensions rise. Protectionist policies and a return to tariffs would cause macroeconomic volatility, which might ultimately hasten the acceptance of Bitcoin (BTC) as a store of value, according to Jeff Park, Head of Alpha Strategies at Bitwise Asset Management.
According to Park, trade wars cause governments to respond with inflationary fiscal and monetary policies, which devalues the value of the currency. Bitcoin becomes a desirable alternative asset in such a setting. He argues that when fiat purchasing power declines, investors from all over the world will turn to decentralized repositories of wealth for protection, which will lead to a long-term spike in demand for Bitcoin.
Even while Bitcoin may have a bullish long-term trajectory, the short-term effects on international markets are probably going to be unpleasant. “Stagflationary for the world as a whole,” according to economist and hedge fund manager Ray Dalio, is what tariffs are. He underlined that these policies frequently have inflationary repercussions for imports and deflationary impacts for manufacturers. Dalio also cautioned that the global financial system may undergo a fundamental transformation as a result of growing debt and trade imbalances.
Nic Puckrin, a market strategist, attributes the 40% chance of a U.S. recession in 2025 to protracted trade disputes and the ensuing macroeconomic instability. Despite Bitcoin’s growing appeal as a hedge, he thinks that sustained economic slump may reduce investor interest for conventional risk assets.
Anthony Pompliano, an asset manager, has conjectured that the U.S. government might be purposefully causing a market decline in order to exert pressure on the Federal Reserve to lower interest rates. Interest in riskier assets like stocks and cryptocurrencies may eventually increase if 10-year Treasury bond yields drop, from 4.66% in January to about 4.00%.
In conclusion, trade conflicts are setting the stage for a paradigm shift even though they may cause significant short-term financial disruptions. As a decentralized, inflation-resistant asset, Bitcoin stands to gain a great deal as fiat currencies decline and central banks respond with expansive monetary policies.
