Bitcoin and Tariffs: A Rollercoaster Ride
Recently, Bitcoin has been on a wild ride. Its value has gone up and down like a rollercoaster, and one big reason is U.S. President Donald Trump’s announcement of tariffs. Let’s find out why Bitcoin’s price drops when Trump says he’s going to put extra taxes on goods from other countries.
Why Bitcoin Sells Off When Trump Talks Tariffs
1. Uncertainty and Fear
When Trump talks about tariffs, people get worried about the economy. This worry makes investors want to get rid of risky things like Bitcoin. Even though Bitcoin is sometimes seen as a safe place to put money during tough times, it’s now more connected to things like stocks. So, when people get scared about the economy, they sell both stocks and Bitcoin.[1]
People are also worried about a “Trumpcession” or a recession because of Trump’s policies. Tariffs can make it harder for businesses to get the things they need, which can lead to higher prices. This makes investors want to get out of risky investments.[1]
2. Investors Look for Safe Places to Put Their Money
When the economy is uncertain, investors look for safe places to put their money. While Bitcoin can sometimes be a safe place, investors are now more likely to choose things like gold or the euro. The Japanese Yen has also gotten stronger, which means people trust these things more than Bitcoin during tough times.[1]
This change is partly because Bitcoin is more connected to other risky things and partly because people think traditional safe places are more stable during bad times. The euro has gotten stronger since Trump talked about tariffs, which shows that people trust real money more than Bitcoin when they’re worried about the economy.[1]
3. Bitcoin Reacts Fast to News
Unlike stocks, Bitcoin can be traded 24 hours a day, 7 days a week. This means Bitcoin reacts right away to news, like when Trump talks about tariffs. When Trump’s tariff plans were confirmed over a weekend, crypto traders sold their Bitcoin quickly before other markets could react, which made the price drop.[1]
Cryptocurrency markets are very sensitive to news, so even small things can cause big changes in price. This is especially true when other markets are closed.[1]
Why Does This Matter?
Bitcoin’s price drops when Trump talks about tariffs because of economic uncertainty, people choosing traditional safe places to put their money, and Bitcoin reacting fast to news. Understanding these things is important for people who want to invest in Bitcoin and other cryptocurrencies, because the world is always changing and so are these markets.
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Sources:
– Cointelegraph
– CoinCentral
– Newsday