Things aren’t looking particularly good for the crypto market. However, the same can probably be said for the financial markets in general. The trade tariffs imposed by Donald Trump on many parts of the world have rocked the markets, and some analysts suspect that the worst is far from over. Bitcoin and many other top coins also suffered a steep decline. And yet, the question remains whether trade tariffs might actually be the best thing that could have happened to Bitcoin.
Bitcoin relatively stable
For a long time, cryptocurrencies were viewed by many companies and governments as too risky and volatile to generate serious investment interest. This may still be true for many coins today. The situation is different with Bitcoin, however. It has long been referred to as “digital gold,” and now it is slowly becoming apparent that the digital currency could live up to this claim.
Although gold has reached a new all-time high due to market uncertainty, something Bitcoin has not achieved, it is clear that the cryptocurrency is significantly more stable than many other assets. Institutional investors who have invested in shares of Apple, Amazon, Meta, or other top global companies, for example, have suffered greater losses in their portfolios to date than with Bitcoin.
Share prices of the world’s largest companies have plummeted by over 30% and are still trading today, on average, 30% below their highs reached just a few months ago. By comparison, Bitcoin also reached its all-time high in January of this year, but is currently trading only 23% below that.
Is there a rethink coming?
Bitcoin reached its lowest point this year almost a month ago, when news surrounding the trade tariffs began to circulate. Since then, the cryptocurrency has been slowly recovering and is now approaching the $90,000 mark again. The situation is different for stocks and other assets. Here, every piece of further bad news rocks prices again.
This is already evident, and if subsequent quarterly figures are released that may turn out to be even worse than already priced in due to the new tariffs, a further price drop is not far-fetched.
How much Apple’s sales figures will actually collapse due to the new tariffs, for example, and how much of the additional costs can actually be passed on to customers remains to be seen. The situation is different with Bitcoin. Here, capital is withdrawn once because market participants are unsettled, but this can quickly prove to be an overreaction.
Overreaction is nothing new on the stock markets, so news like the current one often leads to a sharp drop in prices, with prices then quickly settling back around a fair value. If investors remember that cryptocurrencies are unaffected by trade tariffs, while the revenue losses of many companies are now difficult to estimate, this could quickly lead to many buying more Bitcoin.
This would also allow Bitcoin to live up to its reputation as digital gold. In times of stock market turmoil, commodities can become more attractive again. Especially those that aren’t affected by a recession, where supply is tight and demand is rising. All of this is currently the case with Bitcoin, so the trade tariffs could prove to be one of the best opportunities to solidify Bitcoin as a more mature, crisis-proof asset.
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