How Trump's Tariffs Are Shaking Up Crypto, Bonds, and Bitcoin's Role as a Safe Haven

On April 5, 2025, U.S. President Donald Trump imposed at least a 10% tariff on other countries, with some slapped at higher rates

On April 5, 2025, U.S. President Donald Trump imposed at least a 10% tariff on other countries, with some slapped at higher rates—the European Union at 20%, Japan at 24%, and China at 34%. This also ignited global recession fears that caused investors to sell off risk assets.

Less than a week after the imposition, Trump announced a temporary halt to the tariff. This, however, led to a bullish run in the crypto market.

Similar to cryptocurrencies, another investment asset has been impacted by tariffs and other economic moves by the U.S. government. And apparently, it has a relationship with the crypto market—most specifically Bitcoin. These are U.S. Treasuries.

Financial Securities: How Can They Be Affected by Even a Single Economic Move

In an April 4, 2025, analysis—a day before the new tariff imposition—financial markets aggregator Barchart reported that the U.S. 10-year Treasury yield dropped below 4% for the first time since October 2024.

According to Barchart, the drop in the U.S. Treasury yield was due to investor fears over growing economic uncertainty, including tariffs, a possible recession and a rate cut by the U.S. central bank, the Federal Reserve.

And because U.S. Treasury yields include interest rates on government-issued bonds, Treasury bond yields also experienced a drop at that time.

However, on April 7, 2025, the first Monday after the tariff, Treasury bond yields surged while equities declined. Historically, these two securities are inversely related in terms of performance.

According to the online publication AInvest, because Trump’s tariff caused stock markets to meltdown, investor demand for U.S. Treasuries—including bonds—fluctuated.

Then Here Comes Bitcoin: Its Relationship w/ Financial Securities

Pre-tariff imposition, where the U.S. treasury yield was struggling, the crypto market was having a positive rally, including BTC.

Moreover, historical data shows that when the U.S. Treasury yield struggles, investors tend to seek other investment assets which could offer higher returns, including BTC, which increases liquidity and risk appetite.

“The irony is that when yields fall, there’s less reason to sit in ‘safe’ bonds— And ultimately more reason to chase returns in risk assets like BTC and alts. This is why you see risk-on bulls get excited when 10-year yields begin falling.”

On the other hand, the post-tariff period caused U.S. Treasury yields to rise while the crypto market and equities went down. Investors sought less risky investment assets with fixed interest, unlike BTC, which is volatile in nature.

“If inflation continues to exceed expectations, central banks might maintain a tighter monetary policy for longer periods, which historically has been unfavorable for risk assets. This potential shift necessitates a reevaluation of Bitcoin’s role in diversified portfolios, particularly as it may increasingly function independently from equities.”

However, in terms of a long-term store of value, BTC is seen as the better asset. Analysts believe Trump’s aggressive tariff policy could produce inflationary pressure—tariff-related costs would rise, consumer prices would follow, and the global economy could be affected.

This, in turn, could cause investors to choose BTC over other investment instruments.

Lastly, if the Federal Reserve decides to use QE to improve the country’s economic situation, BTC and the crypto market could recover and experience a bullish rally, according to Arthur Hayes, the founder of BitMEX, a peer-to-peer trading platform specializing in leveraged contracts traded in BTC.

“We need Fed easing, the 2yr treasury yield dumped after Tariff announcement because the market is telling us the Fed will be cutting soon and possibly restarting QE to counter -ve economic impact.”

The same sentiment was expressed by crypto analyst Miles Deutscher, who stated that BTC could reach its new all-time high if the Federal Reserve opts for QE.

To Conclude

Here is how financial securities and BTC behave according to different economic situations.

This article is published on BitPinas: How Trump's Tariffs Are Shaking Up Crypto, Bonds, and Bitcoin's Role as a Safe Haven

News data source: kdj.com

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