Bitcoin and Tariffs: A Stormy Relationship
Recently, Bitcoin has been on a wild ride, with its value going up and down like a rollercoaster. One big reason for this is something called “tariffs” that U.S. President Donald Trump has been announcing. These tariffs are like extra taxes on things we import from other countries, and they’ve been causing quite a stir in the world of money. Let’s look at three reasons why Bitcoin’s value drops when Trump announces these tariffs.
Economic Uncertainty: When Things Get Scary
When Trump says he’s going to put these tariffs on things, it makes people uncertain about the economy. This uncertainty makes investors worried, and they start to pull away from risky things like Bitcoin. Even though Bitcoin is sometimes seen as a safe place to hide during tough times, it’s been acting more like stocks lately, so when stocks drop, so does Bitcoin[1].
Plus, people are worried about something called a “Trumpcession” – a recession that might happen because of Trump’s policies. Tariffs can make it harder for companies to do business, which can lead to higher prices. When people are scared about the economy, they usually don’t want to take big risks with their money, so they sell things like Bitcoin[1].
Investors Look for Safe Places to Hide
When there’s economic uncertainty, investors look for safer places to put their money. While Bitcoin can sometimes be a safe place, lately, people have been choosing things like gold and the euro instead[1]. The Japanese Yen has also been getting stronger, which means people trust these more than Bitcoin when the economy is struggling.
This shift happens because Bitcoin is acting more like other risky things, and people think traditional safe-havens are more stable during bad times. The euro, for example, has been getting stronger since Trump announced these tariffs, which shows that people trust money from other countries more than Bitcoin when they’re worried about the economy[1].
Bitcoin Never Sleeps: News Happens 24/7
Unlike stocks, Bitcoin never stops trading. This means that when Trump announces something like tariffs, even if it’s on a weekend, Bitcoin reacts right away. When this happens, people selling their Bitcoin can cause the price to drop quickly before traditional markets even have a chance to react[1].
This quick reaction happens because crypto markets are very volatile and sensitive to news. The immediate drop in Bitcoin’s price when Trump announces tariffs shows how big news can cause huge swings in the crypto world, especially when traditional markets are closed[1].
A Wild Ride: Economics and Policy Mix it Up
In the end, Bitcoin’s drop in price when Trump announces tariffs is because of economic uncertainty, people choosing safer places to put their money, and the quick reaction to news. These things show how complicated the world of money and policy is, and how it affects Bitcoin. As the world keeps changing, understanding these things will be important for people who want to invest in cryptocurrencies.
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Sources:
– Cointelegraph
– CoinCentral
– Newsday