Bitwise: It's painful in the short term, but Trump's tariff war will ultimately benefit Bitcoin

Written by: Matt Hougan, Chief Investment Officer of Bitwise; Jeff Park, Portfolio Manager, Director of Alpha Strategies

Compilation: 0xjs@编 编

The cryptocurrency market fell sharply a few days ago, and Bitcoin fell about 5%, and many other assets fell greater. When I wrote this article in London (where I attended a meeting there) on Monday morning, Ethereum fell 17%, Solana fell 8%, and XRP fell 18%.

The direct reason for falling is concerns about the global trade war. Last weekend, President Trump imposed a 25% tariff on most imported products in Canada and Mexico, and levied 10% of tariffs on China. These three countries announced corresponding plans. This caused the US dollar to rise by more than 1%against other major currencies, and the prices of stock futures and cryptocurrencies fell sharply.

Of course, because this is an encryption technology, the trouble is not stopped.

In the field of cryptocurrencies, due to the widespread use of leverage, the market fluctuates violently (especially on weekends with low liquidity). Negative news events have led to a decline in prices, which leads to leverage traders to close their positions by selling, which leads to continuous decline in prices and forcing more people to close their positions. This process continues until the leverage is exhausted.

Sure enough, the largest liquidation incident in the history of cryptocurrency from Sunday evening to Monday morning, there may be a leveraged position of up to $ 10 billion in leverage.

Bitwise investors are often long -term investors, so these short -term and leverage -driven callbacks are regarded by most people as opportunities rather than threats -as long as news events are indeed short -term.

So, is it really like this? This is a matter of $ 1 trillion.

My colleague Jeff Park leads the Alpha team of Bitwise. He is one of the most keen minds in the field of macro and cryptocurrencies. His point is that Trump's economic game plan, including tariffs, is actually a long -term active catalyst of Bitcoin.

Below I invite Jeff to share his point:

The result is: Bitcoin win, fiat currency loses. In any case, Bitcoin will go up.

To understand the long -term impact of Tariff Bitcoin, two things need to be remembered: 1) the curse of "Trifen's Discovery", 2) the long -term goal of President Trump.

The first is the "Trifen problem". The problem is named after the name of the Belgian American economist, which proposed this concept in the 1960s, refers to the benefits and disadvantages of the world's reserve currency.

From a negative point of view, the US dollar is overestimated structurally, because other countries need to use it as a reserve currency (no matter what the price), and the United States must continue to exist in trade deficit to supply the world to the world. From the front, the U.S. government can continue to borrow less costs than "should", because there are continuous buyers to buy their debts.

Trump hopes to eliminate negative factors and retain positive factors.

How do Trump plans to achieve this goal? tariff.

Tariffs are usually temporary negotiation methods to achieve their goals—this seems to be the case this time. We believe that the ultimate goal is to reach a multilateral agreement to weaken the US dollar without increasing long -term interest rates. A feasible method is to force countries to reduce US dollar reserves and extend the term of Treasury bonds. This will suppress long -term interest rates and support the foundation of the United States.

But how do you let all countries agree with this? You must force them to sit on the negotiating table.

The United States has done this before. In 1985, West Germany, France, Britain, and Japan signed the famous "Plaza Agreement" to require the US dollar to depreciate in an orderly manner in other currencies. This agreement has greatly boosted American manufacturers because the strong US dollars used to have a difficult competition on the global stage. (Why do these countries sign an agreement? One of the reasons is -you guess right -the fear of tariffs.)

If Trump can obtain this result with bullying, then there is no more favorable asset than Bitcoin. The lower interest rate will stimulate the risk preferences of American investors and push up the price of Bitcoin. Foreign countries will face economic weakness and will take traditional economic stimulus measures to make up for it, thereby pushing up the price of Bitcoin again.

What if he fails? What if we encounter a continuous tariff war? We firmly believe that the weak economic weakness will cause the scale of money printing to exceed any time. Historically, this stimulus Bitcoin is very beneficial.