Cryptocurrency investors are expressing growing frustration over the lack of progress in establishing a U.S. Bitcoin reserve, while Donald Trump's comments on trade tariffs have raised concerns among market participants. Industry experts suggest these factors may contribute to continued market instability.
SkyBridge Capital’s CEO Anthony Scaramucci emphasized that Trump’s unpredictable behavior could result in short-term market "turbulence." However, he maintains that, in the long run, Bitcoin and the broader cryptocurrency sector will emerge as "winners."
Market Reactions to Potential Trade Wars
Gio Chen, a trader and author of the Fidenza Macro newsletter, predicts that fears of escalating trade wars will drive investors away from risky assets. He foresees many crypto assets potentially losing up to 50% of their value from January highs, though a crypto market rebound is expected afterward.
"Ultimately, [trade tariffs] will be reduced (though not eliminated), and the market will absorb and recover from them (as it did in 2018). Cryptocurrency will rebound, as we are not yet at the end of the bull cycle," Chen stated.
Bitcoin’s Resilience Amid Geopolitical Tensions
Analysts at QCP highlighted that the recent press conference by crypto advocate David Sacks left investors disappointed. While they acknowledged that legislative developments and the prospect of a U.S. Bitcoin reserve are long-term positives, they also pointed to short-term hurdles for Bitcoin:
"Bitcoin remains resilient, but geopolitical risks and the lack of crypto-specific catalysts keep markets fragile. Given the major liquidations earlier this week, expect continued volatility. Risk management is key."
Trump’s Tariff Strategy and Its Impact on Crypto Markets
Bitwise portfolio manager Jeff Park believes Trump’s tariff policies aim to weaken the dollar without raising long-term interest rates. According to Park, the global demand for the U.S. dollar forces the country to maintain a persistent trade deficit to supply dollars to the world.
"One way to achieve this is by pushing other nations to reduce their dollar reserves while extending the duration of their Treasury holdings. This would suppress long-term interest rates while simultaneously supporting the U.S. manufacturing base," Park explained.
He further noted that a resulting economic slowdown could prompt additional money supply expansion by U.S. authorities, which has historically been "a strong catalyst" for Bitcoin.
Market Volatility and Potential New Highs
In February, MN Trading founder and analyst Michaël van de Poppe predicted heightened volatility in Bitcoin markets, suggesting the potential for a new all-time high within the month.
