The crypto waters have been anything but calm lately, in part due to the U.S. government’s actions that have sent shockwaves through the system. From the creation of a Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile to the issuance of the Trump Coin and Melania Trump Coin and to on-and-off updates regarding tariff imposition, the fact that Bitcoin has only lost 10% during this chaotic period is rather reassuring than worrying. At least when it comes to the asset’s value and standing in the financial market. Uncertainty tends to dishearten crypto investors, whether retail or institutional, leading to considerable price drops. But Bitcoin’s propensity for recovery and resilience fuels optimism that the market will bounce back, particularly with the tariff situation’s stabilization. Such a scenario is bound to benefit the whole market, as history has proven that Bitcoin’s performance is one of the most powerful factors dictating price movements in all the other cryptos.
Until the effects of the tariffs declared on April 2, 2025, are less cloudy, it’s helpful to review how the latest indecision has affected the market and discover the overall stance of industry experts. This way, you can determine whether trying to hedge your wealth via crypto is a wise move or should be postponed until further clarity is available.
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How inconstant tariff updates have affected crypto
The administration’s unstable approach to tariffs is grabbing headlines internationally, and for good reason. IMF papers disclose that a universal spike of 10% in U.S. tariffs, combined with retaliation from China and the Euro area, might decrease the global gross domestic product by nearly 0.5% through the upcoming year – let alone the U.S. GDP that, might shed 1%. Leaving predictions aside, for they need some data accuracy that can only be obtained via real actions, an unsettling aspect of the administration’s inconsistency is the chaos brought about. Few things are as repugnant as uncertainty when it comes to financial markets like crypto. And even if fluctuations are what opens the room for profits, the fact that the U.S. government plays the fool can – and does – trigger fear, uncertainty, and doubt (FUD).
It’s one thing to enforce tariffs and another ball game to come up with tariffs only to have them canceled, changed, expanded, withdrawn, and eventually counterattacked with more tariffs. The crypto market waits to see what the latest announcement held on the 7th of this month brings about in the crypto scene.
April 2, 2025 – A day to remember
The 47th president of the U.S., Donald Trump, declared on April 2 that tariffs are for a potential national emergency, focusing on the national trade deficit and making public the substantial changes to the U.S. tariff structure. This comes in light of several other previously announced tariff policies that followed the businessman’s return to the Oval Office in January. This initiative is labeled “Liberation Day” and introduces a double-layered tariff system:
A baseline tariff of 10% will be imposed on imports from all countries, coming into effect on April 5, 2025. Additional, country-oriented tariffs enforced on around 60 nations were mentioned, being established by evaluating their trade practices relative to the U.S. These rates vary, so let’s assess the previous and the newly updated rates. Here are the initial ones:
- China: 34%
- EU: 20%
- South Korea: 25%
- Cambodia: 49%
- Vietnam: 46%
- India: 26%
- Japan: 24%
- Malaysia: 24%
The administration has recently raised the rates for imported Chinese goods to 145% – a worrying rise compared to the 54% tax imposed in April. These are the updated and relevant ad valorem rates enforced:
- China: 145%
- EU: 10%
- South Korea: 10%
- Cambodia: 10%
- Vietnam: 10%
- India: 10%
- Japan: 10%
- Malaysia: 10%
Tariff impact on crypto
Some analysts’ stance is rather unexpected. For instance, Peter Tchir, Academy Securities’ head of macro strategy, calls the tariffs “shockingly high” when paralleled with people’s previous expectations. Regarding crypto, the tariffs generate market volatility and uncertainty in the immediate future, as seen up to now. Crypto prices are listed in USD, meaning that crypto costs might rise for non-US residents if the dollar weakens – as it has since the new tariff structure was made public.
However, despite cryptocurrency fortunes being associated with the tariffs’ impact, industry experts deem the new structure rather inoffensive. This is especially relevant when compared to the tariffs’ effect on foreign companies. As such, there should be less reason to get jittery about the latest events.
A change of heart
Many investors flocked to buy crypto after Donald Trump’s re-election, following the latest policy shift that aligned the president with crypto investors. Once a Bitcoin critic, the business tycoon has gradually warmed to crypto, demonstrating his shift through consistent endorsement. The launch of two cryptos named after him and his wife is living proof in this regard.
Macroeconomic aspects triggered by countries like China, which declared a potential 34% tariff on American products, are triggering uneasiness. Many investors wait to see what the relationship between the president and crypto is truly like, postponing any move—unless they have too much at stake, are skeptical, and want to get out. According to experts, staying composed and observing how events unfold demonstrates strategic thinking.
Riding out the storm
Many cryptocurrency experts predict that the market turmoil triggered by the tariff declarations will eventually quiet down. Some of them recommend waiting to see what happens over the following days before taking any major actions.
IG Markets crypto analyst Chris Beauchamp has stated that crypto investors might be looking to reduce potential risks associated with a market downfall by cashing in their crypto holdings. This comes as the stock markets and afferent investors struggle to keep afloat, with prices falling constantly and investors exiting their positions to ward off losses as much as possible.
Endnote
Bitcoin, Ethereum, XRP, and other cryptos have suffered due to the government’s contradictions. Yet, seasoned investors know that the crypto market fluctuates wildly and has ups and downs, which is why they respond with patience and commitment to a pre-established trading strategy.
For now, investors are all eyes on future updates, watching carefully as the new tariff policies take shape. The nearby look may be vague, but the possibility of the leading crypto to emerge as a hedge provides a glimmer of hope. Stay close if you want to engage with crypto – or any other financial market, including stocks, shares, forex, commodities, and the list goes on.
