Head of Alpha Strategies at Bitwise Asset Management, Jeff Park, has suggested that a prolonged tariff war could potentially benefit Bitcoin in the long run.
President Donald Trump recently announced imposing tariffs on Canada, Mexico, and China, sparking concerns about the impact of a tariff war on various sectors.
Trump's decision includes a 25% tariff on imports from Canada and Mexico, along with 10% tariffs on Chinese goods and Canadian energy resources. In response, Canada and Mexico are reportedly planning retaliatory measures.
In a recent analysis, Park discussed the Triffin dilemma and how Trump's objectives could contribute to Bitcoin's future growth.
"While tariffs may be a temporary measure, the bigger picture indicates that Bitcoin is poised for significant upward momentum," Park explained.
The Triffin dilemma arises from the US dollar's global reserve currency status, leading to consequences such as an overvalued dollar, persistent trade deficits, and advantageous borrowing rates for the US government.
Park suggested that tariffs are part of a larger strategy to negotiate new international agreements, drawing parallels to historical initiatives like the Plaza Accord of 1985 aimed at dollar weakening.
Additionally, Park noted Trump's personal interest in lowering the 10-year Treasury yield due to his real estate investments.
Amidst the uncertainty, Park forecasted a scenario where a weaker dollar and declining US interest rates could drive investors towards alternative assets, with Bitcoin emerging as a favored choice.
The escalating economic tensions could further propel Bitcoin's growth trajectory, according to Park.
In response to the tariff announcements, the crypto market witnessed a sudden downturn, with Bitcoin and Ethereum experiencing significant drops. Reports indicate billions have been wiped out from the market, leading to substantial liquidations.
The total liquidations in the past 24 hours, as reported by Coinglass, surpassed $2.23 billion, marking one of the most significant single-day liquidation events in the history of the crypto market.
Crypto analyst Miles Deutscher highlighted the severity of the situation, comparing it to previous collapses and emphasizing the impact on long and short positions.
Overall, the market volatility stemming from the tariff war has raised concerns among traders and investors globally.