What Trump's Tariffs Will Do To Your Crypto

Alrighty! Well the dust is kind of starting to settle after Trump brought a big cardboard sign to the Rose Garden of the White House and told the world every country he would be imposing tariffs on. 

in Trump voice:

And what a list! The greatest list, really. People told me they haven’t ever seen such a good list before, they said “We can’t believe it was this long, how did you do that?” Because no one has ever seen anything like this, quite frankly. 

Anyway, the “Liberation Day” tariff announcement, which even included small uninhabited islands,  sent shockwaves through global markets. And wouldn’t you know it, crypto wasn’t immune either! 

So what’s going on, why is it happening and what can we do about it?

Well, short version: Trump finally did what he was saying he was going to do and dropped his. I’m using the word plan in the most general sense, by the way. Because we’re not talking about targeted slaps on the wrist for China – this is a full blown, no-holds-barred trade offensive hitting imports from everyone in the world. The US essentially just turned itself into a nightclub, and they’re charging entry to anyone who wants to come party. But instead of $20 on the door, it’s 25% at the border. 

On everything. 

But why is crypto hurting, you might be wondering? On paper, crypto’s meant to be this rebel, new age asset class that doesn’t care about geopolitical drama. But Trump’s trade war is about to become your problem too.

First of all, there’s simple market psychology. When the biggest economic power starts throwing punches, investors get jumpy. Traditional stocks wobble because money moves from risky assets to "safe" ones, and crypto is still viewed as a particularly risky asset. Even Bitcoin, the ‘store of value’, took an immediate nosedive back to the low $80Ks after the announcement, and altcoins got slapped about even harder. This isn’t new though, this is typical market reaction stuff. Sell first, ask questions later. If anything, we can come to expect this with crypto in particular because it is by and large, the first thing to get dumped when ‘scary’ news comes out. 

Then, moving onto something a little more technical, there’s the inflation angle. Tariffs, despite what the Trump administration might tell you, mean imports in the US are going to become more expensive. This means American consumers will get higher prices everywhere. From Walmart to Amazon, Donut King to GAP, prices are going to go up. If inflation starts creeping up, the Fed (the people in charge of the money) might get cold feet about cutting interest rates. And interest rate cuts are helpful to investors because money, in a sense, gets ‘cheaper’.Cheap money makes riskier assets like crypto more attractive, so any delay in rate cuts could put a damper on the party.

But this is where things get particularly interesting and were very unexpected. Asia got absolutely pumped by these tariffs, and that matters more than you might realise. That’s because the Asian market is a huge player in crypto. A huge chunk of the industries trading volume and mining power, all comes from Asia. If their economies take a hit because of these tariffs, liquidity is going to dry up from these regions, fast. Fewer buyers and sellers means more volatility, which means your portfolio could be about to get wrecked, son. 

So, what can we do about this? If anything? Well, first and foremost you can keep and eye on the news. In the US, everyone is going to be waiting to see what the Fed does next. If they decide inflation’s getting spicy and hold off on rate cuts, then the pain is just getting started. Then, there’s Asia’s response. If trading volume from Asia starts to collapse, then we’re really in for a dark bear market. 

And finally, as usual, we need to pay attention to what Bitcoin does. Why? Well, because BTC is the most mainstream, dominant coin in existence. It’s the Facebook of crypto, in the sense that your mom and dad use it. So whatever BTC does, the rest of the market typically follows. If it can hold its ground at that $80K mark, that would be ideal. But if people withdraw their money from BTC, and the price dips below that floor, then more people follow suit; panic sets in. You see where this is going. 

The thing is, Trump just did what Trump does best. He throws a grenade into a crowded space and we all scrambling around like mad, wondering what to do next. Crypto’s going to be volatile as hell in the short term, but remember as always, the cooler heads are going to prevail. Every crisis creates opportunity. So keep calm, keep your risk management tighter than ever, and try not to check on your portfolio every hour.

At the end of the day, crypto’s survived worse. Whether this is the start of a bigger correction or just a speed bump on the road to new highs, one thing’s for sure – it’s going to be one hell of a ride.