Donald Trump’s recent decision to impose tariffs on goods from Canada, Mexico, and China has caused significant turbulence in global markets, including cryptocurrencies. Over the past 24 hours, Bitcoin (BTC) and other major cryptos experienced a sharp decline, with traders speculating that the bloodbath could signal a “buy-the-dip” opportunity, especially when looking at the growing demand for dollar-backed stablecoins.
Peter Chung, head of Presto Research, pointed out that Trump’s preference for tariffs over sanctions could lead to greater adoption of stablecoins. “The Stablecoin Bill in Congress could enhance the dollar’s functionality and reinforce its global dominance,” Chung said, highlighting how the bill aligns with Trump’s broader economic strategy.
This sentiment was echoed by Vincent Liu, CIO at Kronos Research, who noted that tariffs could drive the adoption of stablecoins. As concerns about currency volatility rise, stablecoins pegged to major fiat currencies could provide a hedge against economic uncertainty. “In the long run, increased stablecoin adoption could enhance liquidity, attract institutional capital, and drive regulatory clarity,” Liu added.
Furthermore, the $2.2 billion worth of liquidations from crypto futures since Sunday suggests the market may be reaching a turning point. These liquidations could indicate that the price correction is nearing its end, offering potential buying opportunities for contrarian traders looking for a rebound.
The background to these developments is Trump‘s imposition of a 25% tariff on goods from Canada and Mexico, alongside a 10% tariff on Chinese imports. This has sparked a trade war, with retaliatory tariffs already being announced. The U.S. dollar has strengthened in response, but the ongoing trade tensions have triggered a downturn in global markets, including crypto.
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Despite the short-term turbulence, experts like Nick Ruck from LVRG Research suggest that tariff-related shocks to crypto prices have historically been temporary. While the market sentiment is currently negative, the fundamentals of the crypto economy remain intact, and stablecoins may prove pivotal in maintaining stability amid global uncertainties.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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