The recent announcement by U.S. President Donald Trump regarding high tariffs on imports from Canada, Mexico, and China has caused turmoil in financial markets. The crypto market, which operates 24/7, was the first to react. Bitcoin (BTC) plunged over 10%, reaching $91,500, while Ethereum (ETH) dropped 36% from its weekend high to $2,100. Solana (SOL) also saw a 24% decline, falling to $176.
Institutional Demand Supports Bitcoin
Despite the sudden downturn, analysts suggest that Bitcoin could demonstrate long-term resilience. Analysts at Bernstein highlight that while Bitcoin shows short-term correlation with risk assets, it remains a store of value against the U.S. dollar in the long run.
In January 2025, U.S. spot Bitcoin ETFs saw a net inflow of $5.3 billion, aligning with the annual forecast of $70 billion. Additionally, MicroStrategy’s $2.5 billion BTC purchase and further funding plans suggest institutional demand remains strong.
Bernstein analysts also note that the U.S. administration is considering Bitcoin as part of its national reserve strategy. If SAB 121 is revoked, banks may be allowed to offer BTC custody and lending services, which could further support adoption.
Could Tariffs Ultimately Benefit Bitcoin?
Jeff Park, Head of Bitwise Alpha Strategies, argues that the U.S. government is using tariffs as a temporary tool to facilitate indirect interest rate cuts and a weaker dollar. According to Park, this strategy could trigger a sharp Bitcoin rally.
By increasing demand for long-term U.S. bonds and reducing dollar reserves, the U.S. might inadvertently push Bitcoin and other risk assets higher. However, Alex Krüger, another analyst, warns that such policies could negatively impact the U.S. economy, placing additional pressure on Bitcoin.
Former Treasury Secretary Lawrence Summers criticized Trump’s trade policies, calling them economically irrational. Meanwhile, hedge fund manager Daniel Loeb suggested they are part of a broader strategic agenda.
Bitcoin’s Future Outlook
Despite ongoing market volatility, analysts at Bernstein predict that Bitcoin could reach $200,000 by the end of 2025, driven by strong institutional demand. As the market navigates uncertainty, long-term investors remain optimistic about Bitcoin’s price trajectory.
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