Trump's tariff threat shakes the world, market risk aversion surges
US President Trump recently postponed the equal tariff grace period and threatened to impose high tariffs, an action that directly exacerbates global trade tensions. Historical experience shows that escalating trade wars often trigger market worries about economic uncertainty, leading to a surge of funds into safe-haven assets. Bitcoin, as 'digital gold', is likely to become the biggest beneficiary of this wave of risk aversion.
Looking back at the 2019 China-US trade war, Bitcoin rose by 30% in a single month, far surpassing the performance of traditional safe-haven asset gold. With Trump once again brandishing the tariff stick, the market fear index (VIX) has begun to rise. If the situation worsens further, Bitcoin is very likely to replicate the explosive growth of that year.
Increasing divergence within the Federal Reserve, rising expectations for interest rate cuts
The minutes from the Federal Reserve's June meeting show that officials' differences regarding the interest rate outlook mainly stem from differing expectations about the inflationary impact of tariffs. Some officials are concerned that tariffs will drive up prices, forcing the Fed to maintain high interest rates; while another faction believes that the risks of economic slowdown are greater and that interest rates should be cut sooner. CME data shows that the market currently expects a 93.3% probability of maintaining interest rates in July, but if the trade war escalates and economic data deteriorates, the probability of a rate cut in September will rise significantly.
Impact on the cryptocurrency market:
Loose liquidity expectations benefit Bitcoin: If the Federal Reserve turns to interest rate cuts due to economic pressure, increased dollar liquidity will directly boost the rise of Bitcoin and other risk assets.
Inflation concerns boost crypto assets: Tariffs may push up US inflation, while Bitcoin's deflationary nature (a total of 21 million coins) makes it an ideal tool for hedging against the depreciation of fiat currency.
Cryptocurrency market strategy: How to position?
Short-term focus on risk aversion: If Trump's tariff policy is implemented, Bitcoin may quickly surge, it is recommended to accumulate mainstream coins like BTC and ETH on dips.
Long-term bet on the interest rate cut cycle: A shift to easing by the Federal Reserve is a high-probability event, and the dual benefits of Bitcoin's halving and interest rate cuts may trigger a bull market from the end of 2024 to 2025.
Beware of black swan risks: If the trade war leads to a sharp decline in US stocks, the cryptocurrency market may follow suit in the short term, but the decline will be limited, presenting a buying opportunity instead.
Trump's tariff threats and the Federal Reserve's divisions are creating excellent upward catalysts for Bitcoin. History does not simply repeat itself, but always rhymes—when traditional markets are in chaos, cryptocurrencies often become a new outlet for funds. Big H suggests maintaining regular investments at this stage and patiently waiting for the rainbow amid the storm!
