U.S President Donald Trump’s new tariffs have rattled global markets – and cryptocurrencies haven’t been spared. Bitcoin’s sharp drop initially challenged its reputation as a hedge – but history suggests the story may be more complex.
Some investors are treating Bitcoin like a “risk-off” asset – a place to store value in unstable times. It has no country, counterparty, or currency risk directly associated with it. This means that a crisis will not likely affect its fundamentals.
According to Chainalysis’ Geography of Crypto Adoption Report, Bitcoin often acts as a hedge against inflation, especially during global monetary expansion and in countries facing severe currency debasement.
“When inflation eats away people’s purchasing power, people are looking for a way to save future energy, and the best way to do that is to buy Bitcoin,” Jarrett Carpenter, Digital Media & Content Manager for Compass Mining, told The Crypto Radio.
“In the past, people used to buy gold and real estate; but over the past ten years, Bitcoin has grown at a greater compound annual rate than any asset.”
Do institutions still trust Bitcoin?
Carpenter believes market turbulence doesn’t scare institutional investors – in fact, he says many view it as the perfect time to buy. “During a bear market, smart money is always buying when assets are down – and that’s where we are now,” he said.
That kind of institutional confidence reflects one side of the current debate.
Ilya Brovin, Sumsub’s Chief Growth Officer, pointed out that Bitcoin isn’t moving independently of traditional markets. “At this time, the markets are showing quite an obvious correlation between the price of Bitcoin and other risky assets, like stocks,” he said.
Brovin added that real adoption during times of uncertainty depends on more than belief – it requires strong technical foundations. “The perception and further adoption of Bitcoin during uncertain times is unlikely without the necessary infrastructure for other crypto assets,” he said.
“By infrastructure, I mean all of the compliance, security, and technological aspects of working with all crypto assets. So far there is still a lot of risk, as evidenced by the recent ByBit hack and the persistence of fraudulent activity in the space that rose 48% YoY in 2024,” Brovin told The Crypto Radio.
Crypto during times of turmoil
The tariffs announced by Donald Trump took effect on April 9, impacting global markets, dragging down equities, and pushing the total cryptocurrency market cap down by 4.68%, with Bitcoin briefly dipping below $87,000, according to CoinMarketCap data.
Later that day, prices bounced back after Trump announced a 90-day pause on tariffs for most countries. But with these kinds of economic shocks happening time and again, does Bitcoin truly function as a safe haven?
“Bitcoin has held up surprisingly well given the market volatility when compared to previous periods with prices, after dipping, seeming to find support around $80,000,” said Sean Stein Smith, Associate Professor at Lehman College, CUNY.
Eric Jardine, Cybercrime Research Lead at Chainalysis, agreed that the picture is mixed. “While some other crypto assets aside Bitcoin might be seen as a hedge, most still tend to be seen as more of an inherently risk-on trade,” he said.
Remembering Bitcoin’s role in past crises
For Carpenter, the idea of Bitcoin as a safe haven isn’t theoretical – it’s backed by history.
“Despite how Bitcoin’s price dropped like any other equity or commodity during the COVID-19 pandemic, it skyrocketed from $10,000 to $69,000. People definitely saw it as a flight to safety,” Carpenter recalled.
During the banking crises in early March 2023 – when three banks: Silicon Valley, Signature Bank, and First Republic failed in just a few days – “people also flocked to Bitcoin,” he added.
Jardine also pointed to Bitcoin’s growing credibility over time. He noted that Bitcoin “has been increasingly adopted by corporations and governments as a scarce asset to hold for the future”.
“This trend seems to be accelerating over time, with the most notable recent development being the establishment of the US Bitcoin Strategic Reserve.”
Could tariffs boost stablecoin adoption for global trade?
Another angle gaining attention is the potential rise of stablecoin usage in international trade.
With tariffs, capital controls, and currency instability, “stablecoins are a cheaper alternative to traditional payment rails, making it reasonable to expect that more trade might be settled via stablecoins in the future if tariffs persist,” Jardine said.
“Using stablecoins would not mean that companies conducting trade subject to tariffs could avoid paying the tariff, only that they might be able to offset costs via a cheaper payment rail,” he explained.
“Stablecoins retain much of their fundamental value and benefits even in the face of tariff pressure, but given the price stability are viewed more as a medium of exchange versus speculative price gains possible through bitcoin,” added Smith.
As economic uncertainty continues to grow – from tariffs to inflation – both Bitcoin and stablecoins may play an even greater role in the financial strategies of individuals and institutions alike.
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