The cryptocurrency market experienced a sharp decline following US President Donald Trump's decision to impose tariffs on Mexico, Canada, and China. However, Bitwise analyst Jeff Park believes that this economic turbulence could accelerate Bitcoin’s growth due to underlying financial dynamics and strategic policy moves.
Tariffs and Economic Consequences
The analyst points to two key factors influencing the current tariff strategy: the Triffin dilemma and Trump’s personal economic goals. The Triffin dilemma highlights the challenges that arise when a national currency serves as the world’s reserve currency, leading to overvaluation of the US Dollar and persistent trade deficits.
Impact on US Policy and Global Economy
Park explains that the US aims to fix the dollar overvaluation and persistent trade deficits using tariffs as a negotiating tool while benefiting from cheap borrowing. The ultimate goal is a multilateral agreement to devalue the dollar, similar to the Plaza Accord, possibly altering the structure of US Treasury holdings and reducing countries' dollar reserves.
Bitcoin as a Beneficiary
Park argues that tariffs will trigger a weakening dollar and lower US interest rates, leading to a surge in US risk assets. Foreign countries may resort to stimulus policies, weakening their currencies further. This scenario will push investors to seek alternatives, with Bitcoin as the main beneficiary.
Park suggests that a prolonged tariff war could create an ideal environment for Bitcoin’s continued rise, challenging traditional economic models that overlook geopolitical maneuvers.
