Bitcoin's $85K Rebound: Hope or Hype Ahead of Trump's Tariff Showdown?

Bitcoin's price has been on a rollercoaster ride, and as of April 2, 2025, it's trading above $84,000, recovering from a 4.29% decline the previous week. The cryptocurrency's resilience is evident as it navigates through economic uncertainties, including the upcoming tariff announcement by President Trump, dubbed "Liberation Day." But is this rebound a sign of hope or just another hype cycle?



The Fear & Greed Index, a metric that gauges market sentiment, currently stands at 34, indicating a state of fear. This sentiment has been relatively stable over the past few days, with the index remaining at 34 both today and yesterday, and slightly higher at 46 last week. This suggests a general sense of caution among investors, who are wary of the economic uncertainties ahead.

The upcoming tariff announcement could exacerbate this fear sentiment, leading to increased volatility in the crypto market. Economic uncertainties, such as those caused by tariffs, often precede a risk-off sentiment in investors, who may migrate toward safer assets like gold. This could potentially dampen crypto demand and put downward pressure on Bitcoin's price.

However, Bitcoin has historically shown resilience during times of market stress. For example, Bitcoin's dominance rose to 61.4% recently, reflecting a shift toward BTC as a resilient asset amid market stress. This suggests that some investors may view Bitcoin as a safe haven during uncertain times, which could mitigate some of the downward pressure on its price.



The current economic environment, marked by Trump’s tariffs, stagflation risks, and high uncertainty, points to a challenging short-term outlook for Bitcoin. The US Trade Policy Uncertainty Index is currently at 25%, above the high seen during the Trump Trade War 1.0. This high uncertainty and volatile market conditions could exacerbate the fear sentiment, leading to further price declines.

But is hope a strategy? Over the medium to long term, Bitcoin could benefit as a hedge against inflation, stagflation, and a weakening US Dollar (USD), especially if the Federal Reserve (Fed) pivots to a more dovish stance. Bitcoin's fixed supply also drives demand from investors and savers looking to protect their purchasing power.

In conclusion, while the current fear sentiment and upcoming tariff announcement could lead to increased volatility and potential price declines in the short term, Bitcoin's historical resilience and its status as a safe haven asset could also provide some support to its price. As always, investors should remain cautious and brace for volatility in the coming weeks, particularly around the tariff implementation date. But for those with a long-term perspective, Bitcoin's potential as a hedge against inflation and stagflation could make it a valuable addition to their portfolio.