In a recent analysis by Jeff Park, the head of alpha strategies at Bitwise, a crypto asset management firm, it is suggested that President Trump’s tariffs could potentially serve as a bullish catalyst for Bitcoin (BTC). Park asserts that Trump’s strategic use of tariffs is aimed at achieving two primary objectives – weakening the US dollar and lowering US Treasury yield.
According to Park, the Trump administration is determined to reduce Treasury yield in order to enable the government to borrow at cheaper rates, thereby alleviating the financial burden on taxpayers through reduced interest payments. By leveraging tariffs, Trump seeks to compel foreign nations to decrease their dollar reserves, consequently weakening the dollar while encouraging the accumulation of long-term US treasuries. This strategy, if successful, could lead to an increase in demand for the US 10-year Treasury, resulting in higher bond prices and lower yields.
Park predicts that in a scenario where the US achieves a lower dollar and reduced yield, Bitcoin is likely to experience significant price appreciation. He argues that in a climate of weakened dollar and lower US rates, risk assets in the US will soar to unprecedented levels. Park suggests that the tariff costs, potentially leading to higher inflation, will be shared by both the US and its trade partners, with a heavier impact on foreigners. This could prompt affected countries to stimulate their economies through monetary and fiscal policies, ultimately resulting in currency debasement.
As a consequence, citizens of these countries may experience financial crises and seek alternative investments. Park emphasizes that in today’s digitally connected world, Bitcoin emerges as a viable alternative for both sides of the trade imbalance equation. The end result, Park believes, will be a rapid surge in Bitcoin prices due to the global economic tensions.
At the time of writing, Bitcoin is valued at $101,125. Park’s analysis underscores the potential impact of Trump’s tariffs on Bitcoin’s value and highlights the cryptocurrency as a strategic asset in a shifting economic landscape.
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