Bitcoin and Tariffs: A Stormy Relationship
In the past few months, Bitcoin, the most famous cryptocurrency, has been on a wild ride. Its value has gone up and down like a roller coaster. One big reason for this is something you might not expect: tariffs! You know, those extra taxes that the U.S. President, Donald Trump, puts on goods from other countries. Let’s find out why Bitcoin’s price drops when Trump announces these tariffs.
Why Bitcoin Sells Off When Trump Announces Tariffs?
1. Economic Uncertainty Makes Investors Nervous
When Trump says he’s going to put tariffs on things, it makes people uncertain about the economy. This uncertainty makes investors worried, and they start to sell things like Bitcoin. You see, Bitcoin is like a risky investment, and when people are scared, they don’t want to take big risks.
Also, people are worried about a “Trumpcession” or a recession because of Trump’s policies. Tariffs can make prices go up and mess with how things are made, which makes investors even more nervous and they sell their Bitcoin.
2. Investors Look for Safer Places to Put Their Money
When there’s economic uncertainty, investors look for safer places to put their money. They used to think Bitcoin was a safe place, but now they’re more likely to choose things like gold or the euro. The Japanese Yen is also getting stronger, which means people trust these things more than Bitcoin when the economy is shaky.
This is because Bitcoin is more connected to other risky investments now, and people think traditional safe-havens are more stable during bad economic times.
3. Bitcoin Never Sleeps, So It Reacts Fast to News
Unlike stocks, Bitcoin trades all the time, even on weekends. So, when Trump says he’s going to put tariffs on something, Bitcoin reacts right away. If Trump’s tariff plans are announced on a weekend, crypto traders sell their Bitcoin quickly before the stock market can react, which makes the price drop a lot.
Cryptocurrency markets are also very sensitive to news and can be very volatile, so even small things can cause big price changes, especially when the stock market is closed.
So, What’s the Bottom Line?
Bitcoin’s price drops when Trump announces tariffs because of economic uncertainty, people choosing safer investments, and how quickly Bitcoin reacts to news. Understanding these things can help investors navigate the wild world of cryptocurrencies.
Sources:
Cointelegraph
CoinCentral
Newsday