By Nermeen Nabil Khear 
Bitcoin is primed to benefit from the volatility that could engulf traditional markets with the imminent threat of a trade war on the horizon. With Donald Trump already elected, his biggest dilemma will be the issue surrounding the US dollar. While his policies might need the dollar to be weak to boost exports, the reverse is also a possibility that cannot be dismissed, which may increase global financial instability if it happens.
With Trump promising tariffs upon assuming office, the movement of the dollar could pose distinct implications. One of the possible scenarios could see the leading cryptocurrency, Bitcoin play a prominent role. Its status as a safe haven could be crucial, as investors and users adopt the asset as a shield from the fallout of trade wars, inflation, and market uncertainty.
Trump faces a big dollar problem
While Trump will prefer to keep the dollar weak to boost exports, his actions might push it in the other direction, increasing the already high financial instability. Over the last few years, the dollar has swung in the same direction as the global economic momentum. Although it experienced a decline after 2001, the currency rode on the back of the European and Chinese economic weakness to ride to the top post-2011.
From all indications, it looks like the trend will continue under the Trump administration.
David Lubin, a senior research fellow in the Global Economy and Finance Program at Michael Klein, stated that the policies will only boost the dollar while piling pressures on the currencies of trading partners to depreciate. In addition, Trump’s upcoming fiscal expansion and tighter monetary policy show an inkling toward sustained dollar growth.
If the dollar gains strength, it could cause unprecedented negative issues including hindering global trade, limiting the financial access of developing nations, and increasing inflation on weaker currencies.
If things get out of hand, then it could lead to chaotic adjustments like sudden market shifts or the need for United States intervention. Lubin thinks that Trump may ignore the risks, seeing the benefits the country stands to gain from the dollar’s decline. However, the case may be, an overvalued dollar will cause issues for the global economy under Trump’s leadership.
Bitcoin’s win and promising future under Trump
With trade tensions already high, additional impending tariffs may cause issues for currencies. For instance, the dollar gained 0.4% while that of countries like China and Mexico dropped after Trump announced tariffs. Historically, these issues have always pushed investors to evade the volatility in the traditional market using assets like Bitcoin. Bitcoin has always responded in times of economic uncertainty, with the trade war between 2018 and 2020 a typical example.
However, the case of the US-China trade war has shown that China’s actions may affect Bitcoin’s price. While the inflation from the dispute may affect the asset for a while, it promises a safe bet against the dollar in the long run.
Bitcoin miners could also be another major factor, with the increased tariffs affecting imports of some parts, and impacting the overall mining operations. A US-China trade war could likely have a short-term impact on Bitcoin, its design and role as a store of value in such times may make it attractive.
Meanwhile, Trump’s reelection has triggered a good feeling in the crypto industry, leading many to make bullish predictions about the industry entering 2025. However, the market remains a volatile endeavor with corrections as high as 30% in the past.
However, increased adoption through mainstream adoption and ETFs has done a world of good for the asset and its legitimacy.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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