Trump’s Tariff Policy Escalates Global Trade Tensions, Poses Challenges for Crypto Market
According to a recent report from Binance Research, since Donald Trump’s return to the White House and the implementation of significantly higher import tariffs, the U.S. weighted tariff rate has surged to its highest level in nearly a century.
This policy has markedly intensified global trade tensions, exerting direct pressure on international supply chains and economic stability. Concurrently, the cryptocurrency market has experienced substantial volatility: Bitcoin (BTC) has declined by more than 19% from its year-to-date peak, Ethereum (ETH) has fallen over 40%, and the total market capitalization has contracted by nearly $1 trillion. The report highlights a rapid shift of capital toward traditional safe-haven assets such as gold and bonds.
The analysis indicates that the elevated tariff policy has increased domestic price levels in the U.S. while raising the risk of global stagflation—a scenario characterized by slowing economic growth alongside persistent inflation. This economic backdrop places the Federal Reserve in a challenging position: it must address inflationary pressures without further stifling growth through overly restrictive measures.
Market participants have begun anticipating multiple interest rate cuts by the Fed within 2025 to mitigate potential economic downturns. However, these expectations have not alleviated the strain on the crypto market. Data from the report shows Bitcoin’s positive correlation with U.S. equities has strengthened, while its negative correlation with gold has become more pronounced, underscoring its current classification as a “risk asset.”
Despite the crypto market’s near-term struggles, the report suggests that Bitcoin’s long-term value proposition may still hold potential. Should global inflation remain elevated and the Fed maintain a low-interest-rate environment due to economic pressures, Bitcoin could regain traction as an asset to counter currency depreciation. Its fixed supply cap of 21 million coins and decentralized nature provide a theoretical foundation for this role. Binance Research notes that historical data reflects Bitcoin’s resilience during periods of rising inflation expectations. Consequently, if macroeconomic conditions shift, cryptocurrencies could attract renewed strategic investment.
In the short term, global trade disputes, uncertainty surrounding Fed policy, and geopolitical factors are expected to sustain elevated volatility in the crypto market. The report forecasts that market sensitivity will persist over the coming months, urging investors to monitor macroeconomic indicators closely. Over the longer term, however, the crypto market’s trajectory will hinge on internal developments, such as the advancement of decentralized finance (DeFi), blockchain technology, and the broader adoption of digital assets globally. Should the industry strengthen its independent value proposition and reduce reliance on external economic conditions, its market position could solidify.