I. Introduction

After Trump's return to the White House, he quickly fulfilled his campaign promises regarding tariffs, triggering an unprecedented tariff storm described by the outside world as launching "Tariff War 2.0", causing severe fluctuations in traditional financial markets and cryptocurrency markets. Bitcoin and the entire cryptocurrency market experienced a significant downturn under this pressure, with numerous crypto projects facing difficult challenges. This article will analyze Trump's specific tariff measures, macroeconomic transmission mechanisms, the subsequent direction of US tariff policies, and their profound impact on the crypto market, helping investors comprehensively understand the risks and opportunities involved.

II. Tariff Policies Since Trump's Return to the White House

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US Dollar Liquidity Tightening and Liquidity Needs:The trade war disrupts global supply chains and trade, potentially leading to tightened US dollar liquidity. Declining imports and exports will reduce dollar supply in trade, while trade uncertainty makes companies and investors more inclined to hold cash, increasing dollar demand. In this situation, some institutions and investors might be forced to liquidate assets to raise US dollar cash. Some investors in a sharply declining stock market might sell their cryptocurrency holdings for cash. Such selling pressure intensifies the downward trend of cryptocurrency prices. Risk-averse sentiment may also push up the US dollar exchange rate, putting pressure on Bit prices denominated in dollars. Currently, with tariff impacts, the market expects the Federal Reserve to cut rates earlier to support growth, driving US bond yields to sharp drops (US 10-year Treasury yield dropped 20 basis points after tariff news). Changes in interest rate expectations also influence fund allocation preferences: safe-haven funds flow into bond and US dollar assets, relatively weakening the willingness to allocate to high-risk assets.

Market Risk Appetite and Sentiment Shift:Large-scale tariffs are seen as major negative news, directly undermining global investors' risk appetite. Trade tensions triggered by Trump's tariff policies cause market uncertainty to surge, with investors tending to "sell first and wait". Stock market and Bit price declines show high correlation, with TradingView data showing a correlation coefficient of 0.66 between Bit price and S&P500 index, indicating that under severe risk impacts, Bit is currently viewed by the market as a risk asset rather than a safe haven. Uncertainty from tariff policies has also weakened previous market optimism. Trump once released friendly signals towards cryptocurrencies during his campaign and early presidency, driving Bit to surge to around $109,000 by late 2024. However, trade war clouds quickly spread, and as trade prospects deteriorate and economic downward pressure increases, market risk-averse sentiment takes over, significantly weakening previous cryptocurrency price momentum.

Source:https://newhedge.io/bitcoin/us-equities-correlation

• Historical Trends and Cryptocurrency Positioning Changes:The crypto market's response to trade conflicts differs from years ago. When Trump first launched the trade war in 2018, some investors viewed Bit as a hedge against uncertainty, driving its price from around $3,700 to $13,000 that year in a "going against the wind" trend. However, the current market is more mature and more strongly linked to mainstream markets. In this 2025 tariff impact, Bit did not repeat its 2018 strong performance, instead falling alongside stocks. This indicates that Bit's investor structure and market positioning are changing: institutional investor proportion is increasing, with trading behavior more resembling tech stocks and other risk assets, rather than operating completely independently. This change also highlights the increased integration of the crypto market into the global financial system.

IV. Cryptocurrency Market Performance Analysis After Tariff Policy Implementation

Bit and cryptocurrency market trends in Q1 2025 are highly correlated with Trump's tariff policy pace, with changes in transaction volume and capital flows reflecting a shift in investor sentiment from optimistic to cautious, pushing the crypto market into a short-term downturn phase under such macroeconomic pressure.

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5.2 Impact of US Tariff Policies on Monetary Policy

Under the tariff shock, the deteriorating growth prospects are expected to force the Federal Reserve to ease policies earlier than originally planned. Investors anticipate that the Fed may start cutting rates in the second half of 2025. Analysis from JPMorgan Private Bank indicates that the market expects the Fed to lower rates to around 3.5% by the end of the year, and believes that growth risks will overshadow inflation risks as the primary driver of lower yields. However, while trade wars raise recession concerns, the inflation driven by tariffs also limits the central bank's room for easing. This policy dilemma increases market uncertainty.

If tariffs are maintained long-term, high import taxes would effectively impose a stagflation shock on the US economy. If all tariffs are implemented, the resulting price increases might put the Fed in a dilemma: rate cuts could stimulate inflation and asset bubbles, while not cutting rates would create enormous downward economic pressure. If trade negotiations make progress and tariffs are partially lifted, it could improve growth expectations, reduce inflationary pressures, and open up space for Fed rate cuts. At that time, improved liquidity would benefit various assets, including Bit.

5.3 Future US Tariff Policy Direction and Potential Impact on Crypto Market

If trade tensions can be eased in the short term, global risk appetite may recover, potentially triggering a new round of crypto currency appreciation. Especially if the Fed can smoothly cut rates or even expand its balance sheet to release liquidity, Bit and Ethereum, which have experienced deep adjustments, may strengthen again. Given Trump's relatively crypto-friendly personal stance and team, if the economy improves, he might be more willing to embrace crypto technology to attract investment, such as promoting digital asset regulatory reforms and approving more compliant products.

Conversely, if the trade war becomes prolonged or worsens, the global economy might fall into recession, with traditional financial markets declining. In such an environment, crypto currencies will likely continue to fall with risk assets in the short term. However, after this baptism, Bit may have the opportunity to re-prove its value storage function during turbulence. When countries initiate competitive easing and fiat currency credit is damaged, Bit, as a scarce asset not affected by central bank over-issuance, might attract a new round of funding.

VI. Conclusion

In the short term, tariff policies will have a relatively negative impact on the crypto market, with the market struggling to find a bottom amid risk-averse sentiment. In the medium term, the impact will depend on the evolution of the trade war and the effectiveness of macroeconomic hedging policies, with the crypto market likely to maintain high volatility and a consolidation pattern. In the long term, this will drive the global economic and financial system in a new direction, during which Bit and overall crypto assets may obtain unexpected strategic opportunities.

Regardless of the outcome, this tariff shock provides the crypto industry with an opportunity to test its own resilience: whether Bit can truly become "digital gold" will be tested over a longer cycle. If the global economy tends towards fragmentation due to protectionism, Bit has the potential to become a value anchor and hedging tool connecting different economic systems.

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