US President Donald Trump's trade tariffs will send Bitcoin (BTC) prices "violently higher" in the long term due to a weakening of the US dollar in global currency markets and lower yields on US government securities, Jeff Park, head of alpha strategies at financial services firm BitWise, argued.
According to the analyst, tariffs are being pushed to achieve the end goal of weakening the US dollar in international trade to correct trade imbalances and make US exports more attractive.
Park said that the "Plaza Accord 2.0 is coming" — a reference to a 1985 agreement between the United States, Japan, West Germany, France, and the UK to weaken the US dollar.
The analyst added that the tariffs will cause increased inflation that will be disproportionately felt by US trading partners and result in further currency debasement worldwide that will cause the citizens of those countries to seek alternative store-of-value assets like Bitcoin.
Jeff Park lays out argument for tariffs sending BTC prices higher. Source: Jeff Park
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Trump tariffs send crypto markets plummeting
Despite a potentially positive long-term price outlook, as argued by Jeff Park, Crypto markets tumbled in reaction to President Trump's recently announced tariffs on Canada, China, and Mexico.
The price of Bitcoin declined by approximately 7.2% over the last seven days — faring better than most altcoins.
Data from CoinMarketCap shows that altcoins took the brunt of the beating, with large-cap staples Ether (ETH), SOl (SOL), and XRP (XRP) falling by roughly 11.6%, 19.3%, and 16.6% over the last seven days, respectively.
Investors see the trade war potentially heightening inflation in the coming months and have sought refuge in risk-off assets as a hedge against macroeconomic uncertainty.
US dollar shows strength in the short term
The US Dollar Currency Index (DXY), which is a measure of the US dollar's strength against other fiat currencies, has been steadily rising since October 2024.
The dollar has been gaining strength since October 2024, according to the Dollar Currency Index (DXY). Source: TradingView
In January 2025, the dollar's strength pulled back marginally but has partially retraced lost ground in the first several days of February 2025.
A rising US dollar and rising US dollar yields could spell trouble for the short-term price of Bitcoin and other risk-on assets, as investors pivot from riskier assets to US government securities.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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