Bitcoin, the world’s largest cryptocurrency, could serve as an inflation hedge if President Donald Trump’s tariff-led trade tensions erode global hegemony in the US dollar, according to Messari’s analysis.
“We believe over time (taxes) could lead to the separation of Bitcoin from US stocks,” said Dylan Bane, an enterprise research analyst at Messari, a crypto research firm. “It could increasingly be seen as a proxy for high-tech stocks or risk-on trade, but it could be seen as a long-term repository of reliable inflation hedges and value.”
Messari hopes that Bitcoin will remain highly correlated with the US stock market in the near future, but it expects significant changes in the long term.
“Continuous tariffs can catalyze structural economic change and can lead to the separation of Bitcoin from traditional assets as they are recognized as an independent repository of value,” said Bain of Messari.
Investors now consider Bitcoin to be closely tied to the S&P 500, with the correlation that can reach over 70%. “Most investors don’t see Bitcoin as a truly independent and valuable store,” Bain said, adding that tariffs could serve as a catalyst to undermine “the role of the US dollar as a global reserve currency.”
It is a perspective that is increasingly resonating with financial leaders. Last month, Larry Fink, CEO of BlackRock, the world’s largest asset manager, said the US dollar was at risk of transferring to Bitcoin. “If the US is not managing its debt, and the deficit continues to swell, the US risks losing its (its reserved) position in digital assets like Bitcoin,” Fink said.
The news has sparked our concerns about inflation, and this week the Federal Reserve Chair cites “high uncertainty” amid ongoing trade tensions. Federal Reserve Chairman Jerome Powell painted Trump’s rage on Thursday after highlighting that his tariffs could exacerbate inflation and cause a slowdown in the economy. “Powell’s ending can’t come quickly enough!” Trump said on social media.
In these developments, Bitcoin analysts see opportunities for new interest in cryptocurrencies, particularly as an alternative to centralized and traditional currency systems.
“The broader economic uncertainty and institutional mistrust can drive greater interest in crypto as a financial infrastructure that is independent of a single government or financial authority,” Bain said.
Bitcoin is currently trading at around $84,000 after surpassing its new all-time high of $109,000 in January this year.