- Bitcoin could be perceived as the preferred reserve asset if the US Dollar continues to lose ground.
- The lingering global trade war could cause an interest spike in crypto as a non-sovereign asset, says Binance CEO.
- Bitcoin dropped below $76,000 after the US imposed an additional 50% tariff on China, bringing the total trade levy on Chinese goods to 104%.
Bitcoin (BTC) dropped below $76,000 on Tuesday as the crypto market extended its decline after President Donald Trump imposed an extra 50% tariff on China. Despite the immediate price dip, several crypto experts suggest that Bitcoin could see tremendous growth if the US Dollar (USD) continues to plunge and loses credibility as a reserve asset.
Bitcoin could rally amid global trade war and deteriorating macroeconomic conditions
Bitcoin could see a rally despite the global trade war sparking an immediate decline across the crypto market in the past week.
Several crypto experts weighed in on the possibility of Bitcoin rallying in the heat of the trade war, sharing similar sentiments about its growth potential.
Binance CEO Richard Teng stated in an X post that Bitcoin could recover despite the recent risk-off sentiment from investors. He noted that while short-term macro uncertainty has led investors to pull back, Bitcoin still holds strong recovery potential.
Teng highlighted that Bitcoin’s recovery could be tied to many long-term holders who see BTC as a resilient asset during periods of economic instability.
“This environment could also accelerate interest in crypto as a non-sovereign store of value,” Teng shared in an X post on Tuesday. “Many long-term holders continue to view Bitcoin and other digital assets as resilient during periods of economic stress and shifting policy dynamics,” he added.
Bitwise’s Chief Investment Officer Matt Hougan echoed a similar sentiment. Hougan based his argument on a speech by Steve Miran, the Chairman of the White House’s Council of Economic Advisers.
Miran’s speech emphasizes the effect of the US Dollar’s global reserve role in contributing to trade deficits. He also states that demand for the US Dollar has distorted currency markets.
Hougan suggested that Miran is calling for the USD to drop lower, which could positively affect Bitcoin’s price in the short term due to its negative correlation with the US Dollar Index (DXY).
“In the short term, I expect dollar weakness to be good for bitcoin,” Hougan wrote in a Tuesday memo to investors.
Hougan also highlighted that a weaker dollar could initiate a disruption in global markets, leading to the emergence of newer reserve assets.
“My sense is that we will move from a single reserve currency (the Dollar) to a more fractured reserve system, with hard money like bitcoin and gold playing a bigger role than it does today,” noted Hougan.
Likewise, VanEck’s Head of Digital Assets Research Mathew Sigel shared in a note with investors that weakness in the Dollar could result in its replacement with Bitcoin as a safe-haven asset. Sigel noted that a major factor that could cause a rally in Bitcoin is the Fed’s policy response.
“If tariffs weigh on GDP without triggering a fresh inflation spike, the Fed may have scope to cut rates — reintroducing the liquidity conditions under which Bitcoin has historically excelled,” Sigel wrote.
Bitcoin has seen increased volatility in the past week following President Donald Trump’s announcement of reciprocal tariffs on over 180 countries. Bitcoin dipped below $76,000 on Tuesday after President Trump’s additional 50% tariffs on China went into effect, bringing the total levy on Chinese goods to 104%.
The stock market also declined following the announcement, with the S&P 500 erasing gains seen earlier in the day after dropping 6% and wiping $2.5 trillion from its market cap on Tuesday, according to Google Finance data. The index eventually saw a slight recovery before the stock market closed, ending the day with a 1.57% loss.
