Trump’s Actions Signal Implications for Cryptocurrency Markets

Bitcoin $102,967 prices have weakened as anticipated, driven by the unresolved inflation data reflected in stock futures. Concerns regarding tariffs still linger, causing Bitcoin to hover around the $80,500 mark, raising alarms for the cryptocurrency sector. What insights do Trump’s recent comments provide?

Trump Is Not Out of Touch

Despite his erratic decisions, Trump is not oblivious to the consequences of his actions. His awareness is evident in the comments made by Kevin Hassett, the current Director of the National Economic Council.

Officials discussing tariffs noted that Trump’s recent actions could trigger a recession. He is well aware of the economic downturn his decisions could induce and does not desire a depression.

Depression arises from an exacerbation of a recession. While Trump is willing to embrace tough measures, he is not reckless enough to disregard potential repercussions. The U.S. government is particularly cautious to avoid repeating scenarios akin to the Great Depression, when unemployment reached 25% in the 1930s.

Outlook for Cryptocurrencies

If Trump is averse to experiencing anything resembling the Great Depression, he will strive to alleviate the excessive fears currently priced into the markets. It can be suggested that tariffs will not suppress the economy indefinitely, and at some point, Trump will collaborate with his partners to resolve these issues through mutual concessions.

The rapid rise in bond yields and falling stocks have likely prompted Trump to retreat, resulting in the best day for U.S. markets since 2008.

“Everything was proceeding smoothly. There’s no doubt that yesterday the Treasury market led to a more urgent decision.”

Trump also commented that “people were scared” during his recent statements.

What is the expectation for cryptocurrencies? Currently, the likelihood of a quick rebound appears weak. Although markets saw some recovery yesterday, this momentum did not continue as risks from tariffs remain unresolved. Trump is likely to aim for negotiations with his team within two months, prompting various countries to either increase U.S. imports, invest in the U.S., or reduce tariffs to find common ground.

In the medium term, the stance of cryptocurrencies will depend on China’s position. While Trump expects that “they will call me to negotiate,” China is strengthening its role in the African market and fluctuating its currency for export advantage. Plans suggest that the Chinese President might visit and shake hands with Trump in June, but until then, weakness in cryptocurrencies and stocks may persist.

Short-term optimism for cryptocurrencies stems from the U.S. markets experiencing losses exceeding 5%, while expected improvements in bonds have yet to materialize. If Trump perceives risks here, he might take similar steps to facilitate communication with China.