Bitcoin Price Drops Over 13.5% Amid New Tariffs Announcement
The Bitcoin price dropped over 13.5% to $91,201 on Binance following the announcement of new trade tariffs by the US administration. The tariffs include a 25% tax on imports from Canada and Mexico, as well as a 10% tax on Chinese goods and Canadian energy resources.
Potential Impacts of Tariffs on Bitcoin
Jeff Park from Bitwise Invest suggests that these tariffs could lead to a long-term rally in Bitcoin due to the following reasons:
- Tariffs are part of a strategy to address trade deficits while maintaining low borrowing costs.
- The aim is to create a multi-lateral agreement that weakens the US dollar.
- This could drive foreign governments to reduce their US dollar reserves or hold longer-duration Treasuries, keeping yields low.
- Lower Treasury yields may benefit real estate markets and create a favorable environment for Bitcoin.
- Increased demand for alternative stores of value like Bitcoin during trade tensions could raise its price significantly.
Park asserts that a sustained tariff war will boost Bitcoin prices in the long run.
Contrasting Views on Tariffs' Effects
Alex Krüger disagrees with Park, stating:
- Tariffs negatively impact risk assets, leading to market downturns.
- Bitcoin is often correlated with equity markets and typically sees sell-offs during macro shocks.
- The recent drop in Bitcoin may reflect a reaction to unexpected tariff increases.
- Investors may seek safe havens rather than cryptocurrencies during turbulent times.
- A swift resolution to the trade conflict could lead to market rebounds, while escalation may deepen investor concerns.
- The Federal Reserve's potential hawkish stance on inflation could further affect high-risk assets.
As of press time, Bitcoin is trading at $94,000.
