Trump's import taxes may benefit Bitcoin, currently causing a market downturn
In a bold move to repair the federal budget, President Trump has proposed a strategy that focuses on tariffs and workforce reduction, without the need for tax increases. However, this approach has sparked a wave of uncertainty in the US economy.
The implementation of Trump's tariffs has led to a significant rise in yields, which economists view as a sign of turmoil in the US economy. The escalating tariffs could potentially reduce the trade deficit of the USA, a significant figure that has long been a concern.
The potential crash of the US economy could be interpreted as a relinquishing of the USA's monetary leadership and the initiation of de-dollarization. This shift could see Bitcoin, the leading cryptocurrency, emerge as a potential replacement for the dollar as a global reserve currency.
The de-dollarization process, a goal long desired by countries like China, Russia, and Brazil, could accelerate under Trump's economic policy. If these countries decide to sell part of their Treasury bonds in response to the tariffs, it could lead to the USA becoming effectively bankrupt.
The global economy is in flux due to these developments, with the possibility of rising prices for goods and inflation on the horizon. The bear market in cryptocurrencies is undeniable, with Bitcoin, the leading cryptocurrency, plummeting below $80,000 and Ethereum falling below $1,500. The stocks of MicroStrategy, Coinbase, and American miners have also taken a hit.
The Bitcoin Dominance Index, which measures the share of Bitcoin in all values in the crypto market, has risen to 62 percent. Meanwhile, the crypto market has lost around $300 billion since April 4, and more than $1.2 trillion from the peak of the bubble on December 9.
It's important to note that countries like China, Russia, and Iran have been trying to replace the dollar as a reserve currency in recent years, primarily due to geopolitical tensions, sanctions risks, and a desire for greater financial sovereignty.
Yields on 10-year Treasury bonds have risen sharply from 4.0% to 4.46%, a reflection of the market's uncertainty. China, Japan, EU countries, Taiwan, Hong Kong, and South Korea collectively hold around $4 trillion in US Treasury bonds.
Global stock markets are in panic due to the implementation of Donald Trump's tariffs, with analysts at Deutsche Bank warning of a potential simultaneous collapse in the prices of all US assets. These are challenging times for the global economy, and the road ahead is uncertain.
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