Bitcoin's Price May Follow Stock Market Post-Trump Tariffs

Bitcoin's price has shown remarkable resilience amidst the ongoing equity market correction, but experts caution that this stability may be short-lived. According to Matrixport, Bitcoin is expected to follow the movements of the stock market in response to Donald Trump's upcoming tariff announcements.

In a recent post, the crypto financial platform Matrixport highlighted the correlation between Bitcoin and the stock market. While Bitcoin has remained stable during the current equity market downturn, analysts predict a potential shift in the market dynamics. Analyst Markus Thielen anticipates that Bitcoin's price will align with stock market movements following Trump's tariff announcement, which could introduce increased volatility.

Currently, Bitcoin's funding rates are only marginally positive, and retail trading volumes have decreased to levels last seen in summer 2024. This trend indicates a cautious investor sentiment, with traders reluctant to make significant moves. As a result, analysts predict that Bitcoin's price will move in line with equities, presenting both opportunities and challenges for traders. However, given the current market positioning, a significant beta-driven reaction seems unlikely.

Donald Trump is set to unveil his tariff plans, which may include reciprocal tariffs targeting 15 countries. This move is expected to impact the crypto market, with assets like Bitcoin feeling the pressure. The introduction of tariffs has led investors to move away from risk assets like cryptocurrencies, deepening the correlation between digital assets and traditional assets such as stocks and bonds. The Nasdaq's role as a lead indicator in the current risk-off move offers a useful benchmark for attributing parallel weakness across the digital assets market.

Bitcoin has experienced significant volatility over the past few weeks, hitting an all-time high of $108k and then plummeting below $80k. Given the strong correlation between Bitcoin and stock markets, analysts predict that BTC is poised for a major downturn following Trump’s tariff plans. However, some argue that the tariff strategy could bolster Bitcoin's long-term growth. According to Columbia Business School professor Omid Malekan, BTC could emerge as an alternative to traditional safe havens like gold. He noted, “Bitcoin has found footing in some circles as ‘digital gold’ and the physical variety is soaring on the tariff news.”

Malekan’s statement contrasts with BTC critic Peter Schiff’s dismissal of the crypto’s title as the digital gold. Schiff cited Bitcoin’s volatility and inherent threats, addressing it as a digital risk. Despite the differing views, the overall sentiment suggests that Bitcoin's price movements will be closely tied to the stock market's response to Trump's tariff announcements, with potential implications for both short-term volatility and long-term growth prospects.