Can Bitcoin Hedge U.S. Tariff Risks?

​​If you already have some Bitcoin or are planning to buy some soon, you might be wondering how the new U.S. tariffs will affect its price. Things have been changing a lot since Donald Trump became President again. Many people think this is one of the most confusing and intense times in U.S. politics.

After he became President, Trump started making a lot of strict rules. One big thing he did was pick Elon Musk to lead a new government department called the Department of Government Efficiency (DOGE). Elon Musk has been making strange and surprising decisions, and this has made investors and traders very nervous.

Trump also promised to put 25% taxes on products from Canada and Mexico, and 20% taxes on things from China. These taxes are called tariffs, and they can make goods more expensive. This made Trump even more talked about and controversial.But tariffs aren’t the only thing Trump is interested in. He also seems to really like cryptocurrency, like Bitcoin. He said he wants to make it easier for people to use Bitcoin and other digital coins. To do this, he signed a new order to create something called the Strategic Bitcoin Reserve and the Digital Asset Stockpile.

These will hold digital coins that the government took during court cases.David Sacks, who is in charge of crypto and AI at the White House, said this new reserve will be like a “digital Fort Knox”.That’s a place where the U.S. keeps its gold, so this would be the same but for digital money.Some people in the crypto world are excited about this idea. But others think the government should do more or are worried about how secretive the plan is.David Sacks said the government might already have about 200,000 Bitcoins. He asked for a full report to see exactly how much they have. But here’s the big question:

Is a Bitcoin Price Jump Hiding Behind Tariffs?

It might not seem like it at first, but the new U.S. tariffs could actually help Bitcoin’s price go up. Even though some people are worried about these changes, they might be hiding something good for Bitcoin.

President Trump has a strange relationship with the crypto world. Just before he became President again, people launched meme-coins called $TRUMP and $MELANIA. Some in the crypto community didn’t like this at all. A crypto company leader, Danny Scott, even said it seemed like Trump was just making fun of the industry and using it for attention.

But even with all the drama, these new tariffs might help Bitcoin. If Trump goes through with all his plans—like big tax cuts, strict immigration rules, and high tariffs on other countries—inflation (when prices rise) could go up quickly.

This kind of inflation isn’t always good. For example, if people know that cars from Germany are about to get more expensive, they’ll hurry to buy them now. That makes it look like the economy is doing great, but it’s really just people trying to spend before prices rise.

We already saw this starting in December 2024, when the CPI (Consumer Price Index) showed prices going up by 2.9%. Bitcoin noticed this too. In just one day, Bitcoin’s price jumped $1,500, reaching $98,000.

So even though it looks like tariffs are a bad thing, they might actually be helping Bitcoin’s price go up—at least for now.

Short-Term Worries and the Rush to Sell

In the short term, these new tariffs might actually hurt Bitcoin and the rest of the crypto market. That’s because Bitcoin usually grows when people feel confident, and right now, many people are scared. We can see this in the recent drop in Bitcoin’s price.

Bitcoin recently fell to its lowest price in 4 months, and many people started selling their crypto quickly. In just 24 hours—from March 10 to March 11—about $1 billion worth of crypto was sold, which is a huge amount. Bitcoin and Ethereum, the two biggest cryptocurrencies, were the ones that lost the most value.

One big reason for this drop is that some important players in the crypto world made big moves. For example, Mt. Gox, a crypto exchange that was very popular a few years ago, moved tens of thousands of Bitcoins while trying to pay back money it owed. This made people worry and start selling.

Then, a person known as an Ethereum whale (someone who owns a lot of Ethereum) suddenly put a huge amount of ETH into an exchange called Kraken. This made more people nervous. Another large ETH owner also sold a big part of their Ethereum—even at a loss—maybe to stop their account from getting automatically sold off.

As if that wasn’t enough, Donald Trump made a comment saying a recession might be coming. That scared people even more. Because of this, prices in both the stock market and crypto market dropped fast, and all the recent gains disappeared.

Bitcoin also fell to a very low price for a short time before going back up a little. Traders are being careful now. Many are using tools like Stop Loss, which automatically sells their coins if prices fall too much. This helps protect them from losing more money.

This kind of fear and selling is a common reaction when people are unsure about what will happen next—especially when there are big political changes like Trump’s tariff plans.But the big question is: Will Bitcoin stay down, or could things get better soon?

Looking at the Bigger Picture: Can Bitcoin Protect Us from Tariffs?

Right now, Bitcoin still moves somewhat like the NASDAQ (a big U.S. stock market for tech companies). It has about a 40% connection with it, which means when NASDAQ goes up or down, Bitcoin sometimes follows. But before, this connection was even stronger—up to 72%.

Still, Bitcoin has shown that it can break away from the stock market. For example, in March 2023, when there was a big banking crisis, Bitcoin started acting differently from other markets. Even though it’s usually very up and down (we call that volatile), some people still see it as a “safe haven” during hard times.

This makes Bitcoin kind of special. It's like digital gold—something people might turn to when the economy is shaky. Experts think this difference between Bitcoin and other cryptocurrencies, like Ethereum, will keep growing. While Ethereum and other altcoins still follow tech stocks closely, Bitcoin is starting to act more like a protection tool when things go wrong—especially when it comes to U.S. tariffs.

Something to Think About. Tariffs can really change how countries trade with each other. New trade teams can be made, or even trade wars can start. In the short term, U.S. tariffs might cause higher prices, slower economic growth, and a lot of ups and downs for Bitcoin and other risky investments.

But in the long run, Bitcoin could become more useful as a hedge, or protection, against these problems—especially if tariffs make the economy more unstable.

No one knows for sure what will happen next with Bitcoin. But for now, traders and investors should pay close attention to U.S. government decisions and what's happening in the world. That way, they can make smart choices and maybe even benefit from what Bitcoin has to offer during uncertain times.