How Does US Tariff Policy Affect the Crypto Asset Market
As of April 1, 2025, the market is full of expectations and concerns about the U.S. tariff policy to be announced on April 3. As an important variable in the global economy, U.S. trade protection measures will not only affect traditional financial markets but also have an impact on the highly sensitive crypto asset ecosystem. This article speculates on the potential impact of the tariff policy from the perspectives of short-term fluctuations and long-term trends, combining current market dynamics, historical patterns, and real-time discussions on the X platform, and provides decision-making references for investors.
The recent announcement of US tariff policies may become a short-term catalyst for the crypto asset market, driving prices to fluctuate sharply. Here are the three core factors driving short-term impact:
1. Increased economic uncertainty: Escalation of risk aversion
Tariff policies are often seen as a signal of protectionism, which may lead to an increase in the cost of imported goods, a stronger US dollar exchange rate, and an escalation of global trade tensions. This uncertainty often prompts investors to shift from high-risk assets to traditional safe-haven assets such as the US dollar, gold, or US Treasury bonds. Crypto assets, as representatives of high-risk assets, especially Bitcoin (BTC) and Ethereum (ETH), may face selling pressure.
Historical cases provide a reference. In early February 2025, the Trump administration announced tariffs of 25% on Canada and Mexico, and 10% on China after. Bitcoin price Dropped from around $100,000 to a three-week low of $91,441 within a week.
(Source: Gate-BTC）
At that time, market concerns about the escalation of the trade war triggered capital outflows from the crypto market. If the policy continues this trend on April 2, especially involving a wider range or higher tax rates, Bitcoin may quickly test the key support level of $90,000, while other mainstream tokens (such as ETH, SOL) may experience a 10%-20% pullback.
2. Market sentiment fluctuations: the amplification effect of macro signals
The cryptocurrency market is far more sensitive to macroeconomic signals than traditional assets. Inflation expectations triggered by tariffs may alter the Fed’s monetary policy trajectory, such as maintaining high interest rates or even further rate hikes, which is bearish for non-yielding assets like BTC.
The volatility of emotions is behind the behavior patterns of market participants. At the initial announcement of major policies, investors tend to ‘sell first and buy later’: that is, they quickly sell to avoid risks, and then replenish their positions after the situation becomes clear. If the policy details on April 2 exceed expectations (such as comprehensive tax increases or triggering retaliations from multiple countries), this emotional selling may intensify, leading to further short-term downside exploration of the market.
3. Liquidity Pressure: Chain Reaction between Traditional Market and Crypto Market
If the tariff policy triggers a sell-off in traditional markets such as the US stock market, investors may liquidate their positions in crypto assets to meet liquidity needs. After the tariff announcement in February 2025, the total market value of the crypto market plummeted by about $300 billion overnight (BeInCrypto data), highly correlated with the synchronous decline of the S&P 500 index. Assuming the policy continues this trend on April 3, Bitcoin may fall to the range of $89,000 to $85,000, while altcoins may experience a decline of 20% to 30%, especially for tokens with active high-leverage trading.
Short-term forecast: Based on the current Bitcoin oscillation range of $80,000-$85,000 (assuming the trend), if the policy is mild, the market may quickly rebound after panic selling; if the policy is unexpectedly tough, it may trigger technical stop-loss, further amplifying the volatility.
Long-term impact: opportunities and challenges coexist
The long-term impact of tariff policies on the crypto asset market depends on the economic consequences it triggers, market adaptability, and structural changes in global capital flows. Here is an analysis of four key trends:
1. Rising demand for inflation hedging: Bitcoin’s ‘digital gold’ narrative
If tariffs lead to supply chain disruptions and price increases, sustained inflation could become a reality. CoinShares research director James Butterfill has pointed out that although Bitcoin may be under pressure in the short term due to slowing economic growth, in the long term, its scarcity and decentralized nature give it hedging potential in times of economic turmoil. Looking back at the US-China trade war from 2018 to 2020, after Bitcoin initially fell in the early stages of the tariff war, it surged significantly in 2020 amid the overlap of the pandemic and inflation expectations, eventually breaking through $20,000.
If the tariff policy in 2025 raises the US CPI (assuming that the April data exceeds expectations and rises to 4.5%), Bitcoin may regain the narrative of “digital gold” and attract institutional funds back. However, this trend needs to be vigilant about regulatory risks: if the US strengthens tax or compliance requirements on the cryptocurrency market due to economic pressure, long-term fund inflows may be blocked.
2. The game of the strength and weakness of the US dollar: a watershed of capital flow
If tariffs boost the value of the US dollar (due to reduced imports and expectations of a trade surplus), it may temporarily suppress the prices of crypto assets as investors are more inclined to hold US dollar assets. However, if the trade war weighs on the US economy (such as GDP growth slowing to below 2%), a weak US dollar could become a reality, and funds may flow into the crypto market seeking alternative store of value. In February 2025, the US Dollar Index (DXY) briefly rose to 110 before falling back to 105, causing Bitcoin to rebound, demonstrating the dynamic game between the two.
Long term, the trend of the US dollar will be an important indicator for the crypto market. If the US dollar weakens due to trade war imbalance, Bitcoin may challenge $120,000 or even higher; conversely, a strong US dollar may keep it under long-term pressure below $100,000.
Current market background and outlook
As of April 1, 2025, Bitcoin oscillated between $80,000 and $85,000 (based on trend assumptions), and the market has partially priced in expectations for tariff policies. Altcoins have shown differentiated performance: ETH fluctuates around $1800, while SOL consolidates near the dollar. The market direction will be determined by policy details on April 2.
Optimistic scenario: If the scope of tariffs is limited (such as only targeting specific products instead of imposing a comprehensive tax), market panic may quickly dissipate, and Bitcoin is expected to retest $90,000 within a week, with altcoins potentially rebounding by 10%-15%.
Pessimistic scenario: If the policy is unexpectedly tough (such as comprehensive tariffs leading to retaliation from multiple countries), Bitcoin may fall below $80,000 again, with altcoins potentially dropping by 20%-30%, and the total market value may shrink by another $200-400 billion.
Conclusion and Investment Advice
US tariff policies may bring selling pressure and volatility to the crypto asset market in the short term, especially affecting risk-sensitive tokens. In the long run, inflation expectations, the trend of the US dollar, and supply chain adjustments will shape its ultimate trend.
In the short term, it is recommended that investors remain cautious and pay attention to the gains and losses of the $80,000 support level; in the long term, if the inflation narrative is strengthened, Bitcoin and mainstream tokens may usher in a new round of upward trends. Flexibly adjusting strategies and grasping the market dynamics after the policy is implemented will be key to dealing with this uncertain environment.
