The trade war between the U.S. and the European Union is leading to significant changes in financial markets. In particular, the EUR/USD exchange rate is reaching new heights, raising concerns among European crypto firms.
Trade War Weakens EU’s Economic Stability
With tariffs disrupting trade, the European economy faces a new wave of uncertainty. This could slow down investment and increase costs for businesses, including those in the crypto industry. Historically, economic slowdowns have reduced liquidity in crypto markets, as investors opt for safe-haven assets like gold and stablecoins. However, with USDC’s value declining against the euro, European firms relying on stablecoin transactions are in trouble.
Crypto Companies in the EU Face Rising Costs
Many European crypto companies rely on USDC for transactions, payments, and DeFi operations. But with the euro gaining strength against the dollar, stablecoin-based transactions are becoming less valuable for EU-based firms. If the EUR/USD continues its upward trajectory, crypto companies may need to rethink their reliance on dollar-pegged stablecoins and explore alternative solutions, such as euro-backed stablecoins or direct fiat payments.
Investors Looking to Crypto as a Hedge
Despite the risks, some traders see crypto as a potential hedge against currency fluctuations. Bitcoin and Ethereum often react to global macroeconomic instability, meaning that as the trade war intensifies, digital assets could see increased volatility and opportunities for short-term gains. Bitcoin price in EURO saw a bigger decline in prices, especially in the past month as Bitcoin price in EURO crashed by more than 8%.
Trump’s tariffs are causing ripple effects far beyond traditional finance, with the EUR/USD rally raising serious concerns for European crypto firms. With stablecoin payments losing value, rising transaction costs, and investors seeking hedges, the coming weeks will be crucial for the digital asset industry.
