How Bitcoin Benefits in the Long Run

Jeff Park, Head of Alpha Strategies at Bitwise Asset Management, stated that a prolonged tariff war could have a substantial positive impact on Bitcoin over time.

Over the weekend, President Donald Trump imposed tariffs on Canada, Mexico, and China.

Tariff War: Good for Bitcoin?

President Trump has imposed a 25% tariff on imports from Canada and Mexico. Additionally, a 10% tariff on Chinese goods and a 10% tariff on Canadian energy resources are implemented. According to the BBC, Canada and Mexico have also announced plans to impose retaliatory tariffs.

In a recent post on X, Park outlined the Triffin dilemma and President Trump’s personal objectives to explain Bitcoin’s long-term rise.

“Tariffs might be just a temporary tool, but the permanent conclusion is that Bitcoin is not only going higher—but faster,” Park wrote.

Park elaborated that the Triffin dilemma stems from the US dollar’s status as the world’s reserve currency, granting it an “exorbitant privilege.” This privilege results in three structural effects: an overvalued dollar, a persistent trade deficit, and lower borrowing costs for the US government. 

While the US benefits from cheaper borrowing, it seeks to correct the imbalances of an overvalued dollar and continuous trade deficits. Therefore, Park suggests that tariffs are being used as a negotiation tactic to push for a new international agreement. This, he argues, is similar to the 1985 Plaza Accord, aimed at weakening the dollar.

Moreover, Park argues that Trump has a personal stake in this strategy. Given his heavy exposure to real estate, his primary objective is to bring down the 10-year Treasury yield. 

In a scenario of a weaker dollar and falling US interest rates, risk assets in the US could surge while foreign economies struggle with rising inflation and currency devaluation. Faced with financial instability, Park predicts global investors will turn to alternative assets.

“The asset to own therefore is Bitcoin,” Park noted.

He emphasized that as economic tensions escalate, Bitcoin’s ascent will accelerate.

President Trump’s Tariffs Spark Crypto Market Collapse

Meanwhile, the threat of a trade war sent the crypto market plunging. Over the past few hours, Bitcoin briefly dropped to a minimum of $91,281, while Ethereum fell as low as $2,143. This has resulted in billions being wiped from the market

According to Coinglass, total liquidations exceeded $2.23 billion within the past 24 hours. 

“Worst liquidation event in history in a single day,” crypto analyst Miles Deutscher posted on X (formerly Twitter).

Deutscher added that it was worse than the LUNA and FTX collapses, which saw $1.6 billion in liquidations.

Of the total liquidations, $1.88 billion came from long positions and $349.81 million from short positions. In total, 726,788 traders were liquidated.