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Cryptocurrency Bitcoin Prepares for Potential Tariff Impact, Yet ETFs may Provide Some Protection

Institutions' embrace of Bitcoin could potentially counteract mounting external stressors, according to an analyst at Bitfinex.

Preparation for Potential Tariffs on Bitcoin, with Exchange-Traded Funds Potentially Reducing...
Preparation for Potential Tariffs on Bitcoin, with Exchange-Traded Funds Potentially Reducing Impact

Cryptocurrency Bitcoin Prepares for Potential Tariff Impact, Yet ETFs may Provide Some Protection

In recent times, Bitcoin has been experiencing a significant climb towards its all-time high, with consistent ETF flows and strong institutional interest playing a key role. According to Jag Kooner, Head of Derivatives at Bitfinex, this growth could be attributed to the advantages Bitcoin now holds that it lacked in previous cycles, particularly the increasing institutional adoption and growing exchange-traded fund flows.

Historically, Bitcoin's bullish case has been rooted in its role as a hedge against inflation and geopolitical risk. As the US dollar faces challenges, Bitcoin's potential for growth becomes increasingly significant. The challenges that have impacted the American dollar since 2022 include monetary policy shifts, economic indicators, global economic dynamics, fiscal management concerns, and trade policy uncertainty.

Monetary Policy Shifts: The Federal Reserve's aggressive rate hikes to combat inflation led to market expectations of potential rate cuts, making the currency less attractive and causing capital outflows, resulting in a weaker dollar.

Economic Indicators: Moderating inflation in the US reduced the urgency for the Fed to maintain restrictive policies, further influencing dollar strength.

Global Economic Dynamics: Other major economies, particularly in Europe and Asia, showing stabilization or improvement narrowed the growth differential that previously favored the dollar.

Fiscal Management Concerns: Ongoing worries about US fiscal management, including significant budget deficits, have raised concerns among investors.

Trade Policy Uncertainty: Unpredictable US trade policies, such as tariffs, have rattled investor confidence and added to dollar pressure.

In 2025, the US Dollar Index (DXY) has fallen to its lowest level since early 2022, reflecting ongoing shifts in global risk appetite and rising expectations for US interest rate cuts. Other factors contributing to the dollar's decline include de-dollarization trends, concerns about the Federal Reserve's independence, and ongoing worries about US fiscal management.

Jag Kooner believes that these developments could make Bitcoin more resilient than equities in the face of geopolitical uncertainty. He suggests that while Bitcoin may dip initially alongside equities due to tariff risks, any tariff-induced inflation expectations or dollar weakening could feed back into Bitcoin rates positively. If Bitcoin breaks above its all-time high at $111,000, it could confirm a bullish trend in the near term, according to Kooner. However, a significant macro shock could push Bitcoin back down to support between $105,000 and $108,000.

The upcoming GENIUS Act is a potential regulatory development to watch for, as it could impact Bitcoin's growth trajectory. The dollar index's sinking to 21-year lows could potentially lead to Bitcoin gains, as more firms may view Bitcoin as a hedge against inflation and macroeconomic volatility, especially if the dollar continues its downward trend. Overall, the current market conditions are favourable for Bitcoin's potential surge past its all-time high.

  1. Coinbase, a prominent digital asset exchange, has reported increased trading volumes for Bitcoin, indicating growing investor interest as the cryptocurrency approaches its all-time high.
  2. The increasing adoption of Bitcoin by Wall Street and institutions has led to a surge in Bitcoin-based exchange-traded funds (ETFs), such as those offered by Tron and other platforms, boosting the growth of the crypto token.
  3. Initial Coin Offerings (ICOs) are once again gaining traction, with many projects choosing to issue their tokens on decentralized exchanges (DEXs), bypassing traditional financial institutions, signifying the continuous growth and expansion of the crypto technology.
  4. Financiers and investors in 2025 have begun to weigh Bitcoin as a potential hedge against the declining US Dollar Index (DXY) due to monetary policy shifts, increased macroeconomic volatility, and concerns about US fiscal management, further fueling the growth of the crypto market.
  5. Some analysts suggest that as the US Dollar Index (DXY) continues to decline, decentralized finance (DeFi) projects built on crypto technology will gain further prominence, as they offer potential solutions to de-dollarization trends and provide opportunities for increased investing beyond traditional financial markets.

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