In the wake of President Trump’s latest tariffs, there have been some sharp reactions in the crypto market, with Ethereum falling 25% and Bitcoin also becoming a hit. But while the immediate fallout was rocky, some believe the long-term implications of Trump’s trade war could be a major tailwind for Bitcoin.
Sean Farrell, head of Fundstrat’s digital asset strategy, sees current turbulence as part of a broader strategy. “It was pretty bullish this year. We were just off the decent chops… a lot of those chops were… due to tariff concerns,” he explained. “We saw upward pressure on the dollar yield. It put some downward pressure on the crypto price.”
Many traders have been caught off guard by Trump’s latest move, including a 25% tariff in Mexico and Canada and 10% in China, but Farrell may have overreacted the market I think so. “I think people are overestimating the extent to which Trump uses these tariffs to reduce the trade deficit as a negotiation tip,” he pointed out. However, he also admitted that “the market had no idea what happened last week.”
One important concern is that tariffs can create a “barb pricing” environment. “People expect inflation to be higher and slower actual growth. This is a regime where cryptography generally fails,” explained Farrell. In the short term, Fundstrat advises clients to take a more cautious attitude. “Last night I gave a note to my clients advising them to increase cash to their balances here.”
Despite the immediate challenges, Farrell is confident in Bitcoin’s long-term trajectory. “When you look at this, you’ve created a very powerful bull case,” he said. One of the major bullish factors is the growing interest of the administration in Bitcoin as a strategic reserve asset. AI and Crypto Czar David Sacks recently said, “One of the first things we will consider is the feasibility of Bitcoin reserves.”
While some speculate that this could lead to major Bitcoin purchases by the government in the near future, Farrell is being measured more. “I don’t think we’re going to get a real move on (a strategic Bitcoin reserve) or news around it until we get closer to the deadline that the White House working group has been given. A few days after signing that executive order. ” he explained. “That kind of thing will take the risk of upward headlines of good news from the table in the near future.”
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