Tariff Policies Hit Financial Markets Hard, but Crypto Markets See Long-Term Opportunities?

Introduction

The wait is finally over. U.S. President Donald Trump has announced a series of tariff policies, including a baseline 10% tariff on most imported goods worldwide and higher retaliatory tariffs on several countries. These policies have not only caused significant upheaval in traditional financial markets but also triggered notable volatility in the cryptocurrency market.

Why Were the Tariffs Introduced?

The Trump administration’s tariff policies aim to promote the revival of U.S. manufacturing and reduce the trade deficit through so-called “reciprocal tariffs.”

However, the implementation of these policies has been widely criticized. For instance, Trump’s method of calculating tariff rates is not based on actual tariff or non-tariff barriers but derived from a pseudo-scientific formula: “trade deficit divided by the other party’s total exports.” This calculation method has exaggerated the tariff rates for many countries, turning them into tools for political maneuvering.

The baseline tariff rate (10%) will take effect on April 5, while higher reciprocal tariffs will be implemented on April 9. These policies have severely impacted Southeast Asian countries such as Vietnam, Thailand, and Cambodia, and have negatively affected global trade environments and investment confidence.

Dramatic Reactions in the Crypto Market

Following the announcement of the tariff policies, the cryptocurrency market experienced sharp volatility, first surging and then plummeting. Bitcoin (BTC) initially rose to $88,500 after the announcement but quickly lost its gains, dropping below $82,500 at its lowest. This performance indicates that Bitcoin has not demonstrated its characteristics as a safe-haven asset and remains highly correlated with traditional financial markets.

Other cryptocurrencies were also affected by market turbulence. For example, Ethereum (ETH) dropped below $1,800, and Solana (SOL) fell below $117. The total cryptocurrency market capitalization fell by 4% within 24 hours, while the Fear and Greed Index dropped from 44 to 25, entering the “extreme fear” zone.

Potential Impact of Tariff Policies on the Crypto Market

The announcement of the tariff policies has significantly increased volatility in the crypto market. Derivatives trading data shows that the total liquidation amount across the market reached several hundred million dollars in a short period, with long positions being liquidated far more than short positions. This reflects the market’s strong reaction to policy uncertainty, with investor sentiment turning cautious. Meanwhile, blockchain analytics platform Santiment noted that while the cryptocurrency market remains sluggish, gold—a traditional safe-haven asset—has seen a substantial increase in appeal. Over the past three months, gold prices have risen by 20%, reaching record highs, while Bitcoin has failed to decouple from its correlation with the S&P 500 index.

Additionally, Grayscale Research suggests that the tariff policies may weaken the global dominance of the U.S. dollar, creating new opportunities for cryptocurrencies like Bitcoin. Although prices have declined in the short term, the long-term potential of cryptocurrencies as global monetary assets could be further enhanced. This perspective indicates that despite the current market volatility, cryptocurrencies may see more development opportunities in the future.

Market Opinions and Future Outlook

Opinions on the impact of tariff policies on the crypto market vary:

Optimists:

Some analysts believe the situation resembles the market turbulence caused by the 2018 trade war, which could benefit the crypto market in the long run. Tariff policies may drive more capital into decentralized financial s, fostering broader adoption of cryptocurrencies.

Cautious Observers:

Chris Burniske, a partner at Placeholder VC, stated that he would not take aggressive actions at this time and would wait for further market dips to consider increasing his positions. He believes market sentiment will depend on the progress of tariff negotiations.

Pessimists:

BitMEX co-founder Arthur Hayes warned that if Bitcoin fails to hold the critical support level of $76,500 by April 15, the U.S. tax filing deadline, the market could face greater downward pressure.

Trump’s tariff policies have not only had profound impacts on the traditional economy and trade environment but also challenged the stability of the crypto market. In the short term, the volatility in the cryptocurrency market may intensify further, with investor sentiment turning more cautious. However, in the long term, the weakening of the U.S. dollar’s position due to tariff policies could create new opportunities for cryptocurrencies.