Bitcoin made the victory headline after winning the Trump election, but ended the first quarter of 2025 in red. Since the beginning of 2025, Bitcoin has registered instability and has been overwhelmed by speculation that the Fed may have limited scope for further interest rate cuts.
In early March, there was an executive order by Donald Trump to establish a strategic Bitcoin reserve for the US. This reserve is currently not planned by the US government to purchase additional Bitcoin. Investors have found the move to be overwhelming.
Recent market volatility and a wider risk-off environment due to Trump’s trade tensions have caused Purbucking Bitcoin. Still, Bitcoin has scored 2.8% for the past month (April 19, 2025 and as of writing), compared to a 7.2% decline in the SPDR S&P 500 ETF Trust (April 17, 2025) decline of 7.2%. ISHARES Bitcoin Trust Etf IBit has withdrawn just 0.7% in the past month.
The above performance shows that Bitcoin shows strong resilience amidst the turmoil of a tax-driven market. Fed Chair Powell once labeled Bitcoin as “virtual gold and digital gold,” while billionaire investor Ray Dalio advised people to invest in hard assets such as gold and Bitcoin to avoid the impact of the looming debt crisis.
Bitcoin is often advertised as a hedge against inflation and has a fixed supply. This move is in contrast to traditional Fiat currency, where central banks can issue unlimited amounts. Therefore, during inflation, the value of Fiat currency tends to decline.
Bitcoin, on the other hand, can maintain its wealth amidst high inflation due to limited supply. In any case, Trump’s high import duties are expected to blow out inflation worldwide. Therefore, Bitcoin should do well in such an inflation environment.
MicroStrategy MSTR was a child of the company’s Bitcoin adoption poster, but it is no longer alone. GMESTOP (GME), Rumble (RUM) recently began accumulating Bitcoin as part of its balance sheet strategy. These new entrants are likely to strengthen institutional adoption, creating general purchasing pressure in the market.
Fed Chairman Jerome Powell recently adopted a less wise tone by citing concerns about tariff-driven inflation and reluctantly committing to reducing interest rates, but things can be more difficult in reality. If the US economy slows down due to the trade war, the Fed could be forced to cut fees more quickly than previously expected. Lower charges usually support risk-on assets like Bitcoin by reducing the opportunity costs of holding small assets.
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