Alisa Davidson
Published: March 07, 2025 at 9:00 am Updated: March 07, 2025 at 7:25 am
Edited and fact-checked:
March 07, 2025 at 9:00 am
In Brief
Investor anxiety over Donald Trump’s imminent tariffs led to a broad sell-off on Friday, causing a sharp drop in BTC and risk-sensitive currencies, while driving up demand for safe-haven assets like the US dollar.
Growing anxiety among investors over the U.S. President Donald Trump’s imminent tariffs triggered a broad sell-off on Friday, hitting risk-sensitive currencies like the Australian dollar and sending bitcoin sharply lower, while boosting demand for safe-haven assets like the U.S. dollar.
Trump announced on Thursday that his planned 25% tariffs on Mexican and Canadian goods would officially take effect on March 4, alongside an additional 10% duty on Chinese imports. The confirmation dashed hopes that the administration might delay the measures further.
Crypto Taking a Hit
The risk-off sentiment gained momentum during the trading day, with cryptocurrencies among the worst-hit assets as BTC reached a low of $79,000, its weakest point since November. Similarly, ETH saw a sharp decline, barely scraping above $2,000.
Both bitcoin and ether were on course for their most significant monthly losses since June 2022, following a surge in the latter part of the previous year fueled by optimism that a crypto-friendly Trump administration would boost the asset class.
According to Joshua Chu, co-chair of the Hong Kong Web3 Association, the dip below $80,000 for Bitcoin signals that the initial positive sentiment driven by high-profile endorsements and a crypto-positive administration has faded.
Elsewhere, the euro struggled, hitting a two-week low of $1.038 before climbing up to 1.07. Sim Moh Siong, a currency strategist at Bank of Singapore, explained that the tariff concerns had jolted the markets, shaking off earlier complacency.
Trump’s comments eliminated any remaining optimism about a potential last-minute deal to avert full tariffs on Mexico and Canada. On Sunday, Treasury Secretary Scott Bessent confirmed that Mexico had proposed matching the U.S. tariffs on China to avoid being hit with the additional levies, urging Canada to follow suit.
Meanwhile, Commerce Secretary Howard Lutnick added in an interview that the tariff proposal on Mexico and Canada remained “fluid,” suggesting that the 25% levy could be lower than originally planned.
The growing tariff worries weighed heavily on Wall Street, leading to its first monthly decline of the year in February, with the Nasdaq nearing a 10% drop from its all-time high and marking its worst month since April 2024 with a 4% loss.
The Market Reaction
In response to Trump’s tariff announcement, which imposed 25% tariffs on Canada and Mexico alongside increased China levies to 20%, investors moved to protect themselves by pulling back from riskier assets. Concerns grew with indicators of economic stress, such as U.S. factory prices hitting their highest levels in almost three years and worsening supply chain disruptions.
Vikram Subburaj, Giottus’ CEO, remarked that bitcoin had lost its weekend gains and was now trading between $82,000 and $85,000 as investors analyzed the ramifications of the new tariffs. He noted that market turbulence could continue as the tariffs took effect later in the day.
On Monday, Trump’s announcement about the creation of a U.S. Crypto Strategic Reserve that would include Bitcoin, Ethereum, XRP, Solana, and Cardano, with Bitcoin and Ethereum at its heart, revived enthusiasm in the crypto markets.
This announcement triggered a brief surge in Bitcoin, which climbed 10% to $92,000. Cardano recorded an impressive 64% jump to $1.13, with XRP climbing 26% to $2.80 and Solana up by 17%.
However, the gains didn’t last long, as doubts about how the plan would be carried out, along with concerns over regulatory challenges, led to a sharp price reversal.
The crypto market, which had seen wild price swings, experienced a quick shift as initial optimism faded, and traders questioned the real-world impact of Trump’s proposal.
Inflation and Tariffs Not Over Yet
A recent survey by JPMorgan Chase revealed that inflation and tariffs are top concerns for institutional investors in 2025. Over half of the participants in the survey acknowledged the significant impact these factors have on the global financial system.
Although worries about an economic crisis have diminished, the emphasis now is on the growing expenses of doing business and the unstable market created by continuous tariffs and inflation.
The survey revealed a clear rise in fear about tariffs and inflation over past years. 27% of respondents said these were their main concerns in 2024, but now this number has skyrocketed to 51%.
The current economic scene makes it abundantly evident that future investment plans will be mostly dependent on legislative decisions. Both companies and investors are looking more and more to alternative financial products as fiat currencies keep losing value from inflation.
Particularly Bitcoin, cryptocurrencies are seen to be a possible fix as they provide a distributed protection mostly untouched by conventional government laws. Many see digital assets as a consistent counter to the continuous volatility brought on by inflation.
Can Bitcoin Perform as a Solid Hedge Against Inflation?
Although they are not a recent phenomena, tariffs have been employed by governments to defend home companies, leverage in trade talks, or boost income. Historical data, however, reveal that tariffs often fuel inflation.
This raises an important question: Can Bitcoin serve as a hedge when tariffs push prices higher?
Some, like Bitcoin whale Michael Saylor, see Bitcoin as an effective protection against inflation. Its fixed supply and decentralized nature make it a compelling choice in times when traditional markets face economic strain.
A good example is Argentina, where In 2024, inflation was above 117%, causing Bitcoin trading volumes to double as citizens sought to protect their wealth from the peso devaluation.
Several arguments back his view:
Scarcity in a Print-Happy World: Unlike fiat money, which governments may generate at whim, Bitcoin has a finite supply—just 21 million coins. Particularly in times of tariff-driven market instability, its natural scarcity renders it impervious to inflationary pressures.
A Store of Value: Over the past ten years, Bitcoin has outperformed conventional assets delivering over 20,000% returns. Its independence from government policies means that while tariffs may drive inflation and cause fluctuations in national currencies, Bitcoin remains unaffected.
Decentralization: Operating beyond the reach of any government, Bitcoin is impervious to trade conflicts and currency swings. This freedom appeals particularly in uncertain economic times.
Global Accessibility: Anyone with an internet connection may buy Bitcoin, hence it is especially helpful in areas where national currencies are unstable or banking facilities are few. In a world where tariffs raise prices and complicate trading, Bitcoin gives companies and people a means of cross-border capital transfer free from government-imposed limitations or conventional banking institutions.
Can Bitcoin Survive Inflation & Tariffs?
Though its volatility, low popularity, and legal uncertainties point to its effect being small for now, Bitcoin shows promise as an inflation hedge. Though it lacks Bitcoin’s speed and worldwide availability, gold is a more consistent and proven secure refuge. Navigating an unpredictable economy could best be done with a diversified approach integrating both assets.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
More articles
Alisa Davidson
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
More articles
