The US tariffs do not sink Bitcoin: is the crypto market ready to restart?

Yesterday, in the traditional financial markets, it was a tragic day due to the new tariffs imposed by the USA on other countries, but not for Bitcoin.

The possible explanation for this difference is promising for the coming months.

The new tariffs imposed by Trump’s United States

The day before yesterday, with the markets closed, President Trump announced new tariffs.

Although he had already anticipated the initiative, he did it incorrectly, to the point of misleading the markets.

In fact, it had announced that the tariffs introduced on April 2 would be reciprocal, but instead, they were not at all.

With “dazi reciproci” one should understand those that a country imposes in equal measure to other countries that apply them against it.

For example, the EU applies tariffs towards the USA lower than 2%, so if the new tariffs announced by Trump had been truly reciprocal, one would expect that they would not have been higher than that figure.

And, instead, the new US tariffs against the EU will be 20%, because they are calculated with a formula that completely ignores the EU tariffs against the US.

The fact of having announced reciprocal tariffs, and instead having applied non-reciprocal tariffs, caught the markets by surprise, which reacted poorly yesterday. Moreover, Trump continues to insist on calling them “reciprocal” tariffs even though they evidently are not.

The crash of the markets

As mentioned before, the announcement from the day before yesterday by Trump was made after the evening closure of the US stock exchanges.

A few hours later, the Asian markets reopened, in a strong decline, and subsequently, the European ones also opened in decline.

Therefore, there is nothing surprising if even the USA stock exchanges recorded strong declines yesterday. It was one of the worst sessions since the beginning of the pandemic.

The index S&P500 lost 4.8% in a single day, while the Nasdaq fared even worse, with a loss exceeding 5.4%.

Note that compared to the beginning of the year, the S&P500 is down 8.5%, so yesterday’s event can definitely be defined as a mini-crash. The Nasdaq, on the other hand, is now at -12% since the beginning of the year.

Bitcoin holds

Despite this, the price of Bitcoin yesterday did not fall below $81,000, and indeed today it returned above $84,000.

The reason could be linked to the dollar.

In fact, when the American dollar weakens, it tends to have positive effects on risk-on assets, such as Bitcoin or the stock market.

However, while the trend of Bitcoin’s price in the medium/long term is indeed inversely correlated to the Dollar Index, the same cannot really be said for the stock market.

In other words, if a decline in the Dollar Index often tends to have a direct effect on the price of Bitcoin, the same thing happens much less frequently, and often only indirectly, with the stock market.

The Dollar Index

Yesterday the Dollar Index fell below 102 points for the first time since October, that is, before Trump’s electoral victory.

Note that after his victory, it had soared to 110 points, but starting from mid-January, it began a declining phase that is still ongoing.

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To tell the truth, this declining phase has not been able to raise the price of Bitcoin, but it should not be forgotten that while the price of BTC was rising, it did so in an unusual way. This anomaly ended only in March, and now the trend of the dollar seems to have returned to inversely affect the price of Bitcoin.

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And so yesterday, while the US stock markets were dropping significantly, the decline of the Dollar Index managed to prevent the price of Bitcoin from dropping too much, and today it even allowed it to recover slightly. The same thing, however, did not happen for the US stock markets.

The forecasts

However, one must not get caught up in entusiasmi troppo facili at this moment.

In fact, although the decline of the Dollar Index could continue for a long time, perhaps even until the end of the year, as far as Bitcoin is concerned, negative forecasts for the medium-short term continue to circulate.

The hypothesis is that the difficulties currently being experienced by global financial markets will not disappear soon, and this could end up having a negative impact on the entire asset risk-on sector, including Bitcoin.

It is, however, possible that this phase of difficulty may end in a few weeks or a few months, paving the way for a possible change of trend in the second half of the year.

If, as indirectly confirmed by Trump himself, his goal at this stage was to force other countries to negotiate with the USA, then it is possible that when such negotiations get to the heart of the matter, the card of tariff reduction might be played, which would dissipate some fear.

The current situation remains in flux, and from now until June there could still be numerous novità.