Positive developments on the tariff war front yesterday gave a much-needed boost to global markets, with President Donald Trump announcing a 90-day pause on reciprocal tariff hikes. This move sent ripples of optimism across the US stock market and the cryptocurrency sector, especially benefiting Bitcoin, which had previously been caught in the crossfire of the trade conflict.
Earlier this week, the ongoing tariff dispute led to a significant drop in Bitcoin‘s price, plunging to $74,000, causing a broader market downturn. The tension surrounding the border importation tax had cast a cloud of uncertainty over the crypto market, sparking skepticism among investors. However, Bitwise CIO Matt Hougan believes this recent tariff pause could have bullish implications for Bitcoin, both in the short and long term.
Hougan pointed to a key statement from Steve Miran, Chairman of the White House Council of Economic Advisors, who in a letter to investors highlighted the economic distortions caused by the US dollar’s role as the global reserve currency. Miran noted that the dollar’s dominance has led to unsustainable trade deficits and weakened America’s manufacturing sector. For Hougan, this signaled an intention by Trump to reduce the dollar’s supremacy, a move that could ultimately benefit Bitcoin.
The Bitwise CIO explained that Bitcoin’s -0.4 to -0.8 correlation with the US Dollar Index (DXY) means that as the dollar weakens, Bitcoin is likely to strengthen. This dynamic could position Bitcoin as a hedge against the dollar’s decline.
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What to Expect
Looking further ahead, Hougan sees Bitcoin assuming a significant role in the global economy, particularly if the dollar’s dominance as a reserve currency diminishes. In this scenario, Bitcoin and gold could become preferred assets for international trade settlements, marking a significant shift in the financial landscape.
Interestingly, Hougan’s outlook is shared by BlackRock CEO Larry Fink, who recently acknowledged Bitcoin’s potential to challenge the dollar’s dominance. With both financial heavyweights predicting a future for Bitcoin as a global reserve asset, the crypto asset’s trajectory remains highly promising—especially as Bitcoin continues on its path to reach $200,000 by year’s end.
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.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
