President Donald Trump’s tariff policies have introduced significant volatility into global financial markets, including cryptocurrencies, as outlined in various analyses from early 2025.
His tariff appeal, following a federal appeals court ruling that deemed some of his tariffs’ illegal under the International Emergency Economic Powers Act (IEEPA), continues to create uncertainty with potential ripple effects on crypto markets.
Market Volatility Due to Uncertainty
Trump’s tariff appeal, particularly after the May 2025 court ruling against IEEPA tariffs, has heightened economic uncertainty. The U.S. Court of Appeals allowed tariffs to remain in effect until at least October 14, 2025, pending a Supreme Court appeal, keeping markets on edge.
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Cryptocurrencies, often treated as risk assets, have experienced sharp declines during tariff-related announcements. For instance, in early February 2025, Bitcoin dropped to $91,281 and Ethereum to $2,143, with the total crypto market cap contracting by 8% to $3.2 trillion in a single day following tariff announcements targeting Canada, Mexico, and China.
A 90-day tariff pause announced on April 9, 2025, led to a brief recovery, with Bitcoin rising 5%, Ethereum 9%, and XRP 9%, but volatility persisted as markets remained sensitive to policy shifts. Cryptocurrencies have shown increasing correlation with traditional markets like the S&P 500 and Nasdaq, which fell significantly (e.g., S&P 500 dropped 6% on April 2, 2025) during tariff escalations.
This correlation amplifies crypto price swings when tariff news disrupts equities. Investors often shift to safer assets like gold or U.S. bonds during tariff-induced uncertainty, reducing demand for volatile assets like crypto.
Dollar Strength and Crypto Prices
Tariffs initially strengthened the U.S. dollar due to safe-haven demand, which can depress crypto prices as investors favor dollar-based assets. However, prolonged tariff disputes could weaken the dollar if trade deficits widen or global confidence in USD erodes, potentially boosting Bitcoin as an alternative store of value.
Some analysts argue that tariffs could weaken the dollar’s global dominance over time, creating space for Bitcoin as a decentralized alternative. Experts like Zach Pandl from Grayscale and Matthew Sigel from VanEck suggest that a fractured global reserve system could elevate Bitcoin’s role as a hedge against economic instability.
If the Federal Reserve cuts interest rates to counter tariff-induced economic slowdown, increased liquidity could favor Bitcoin, as seen in past low-rate environments. Tariffs on Chinese goods, such as a 50% levy effective February 2025, could increase costs for Bitcoin mining equipment and semiconductors, critical for crypto infrastructure.
This may raise operational costs for miners, potentially reducing profitability and affecting market dynamics. Conversely, tariffs could incentivize domestic production of mining equipment, reducing U.S. reliance on foreign suppliers and potentially strengthening the crypto sector long-term.
Despite tariff turmoil, Trump’s administration has signaled a pro-crypto stance, with potential regulatory clarity and support for stablecoins. This could bolster investor confidence in the long term, offsetting some negative tariff effects. However, ongoing legal battles over tariffs introduce uncertainty, which could deter institutional investment in crypto until resolved.
While short-term volatility is a concern, some experts remain bullish on Bitcoin. Anthony Pompliano and Michael Saylor argue that crypto’s borderless nature could shield it from tariff impacts, predicting new all-time highs by year-end 2025. As of September 2025, Bitcoin has been trading in a range, reflecting a tug-of-war between bullish and bearish forces. Analysts suggest monitoring the 109,000–109,300 support zone for Bitcoin, with a breakout above 114,000 signaling potential upside.
The Supreme Court’s ruling on Trump’s tariff appeal will be critical. If tariffs are struck down, markets may rally, but new tariffs under alternative authorities (e.g., the 1974 Trade Act) could still disrupt crypto. Investors should watch Federal Reserve policies, inflation data, and global trade negotiations, as these will influence crypto’s trajectory alongside tariffs.
Crypto markets remain highly sensitive to macroeconomic shifts, and tariffs amplify this. Investors should be cautious, diversify, and focus on long-term fundamentals. However, long-term prospects for Bitcoin and other cryptocurrencies could improve if tariffs weaken the dollar’s dominance or spur domestic crypto infrastructure growth.
The outcome of the Supreme Court appeal and broader economic policies will be pivotal in shaping these impacts. For now, investors should monitor key support levels, regulatory developments, and global trade dynamics to navigate this turbulent landscape.