Arthur Hayes, co-founder of BitMEX, said Thursday that Trump’s planned tariffs are positive catalysts for the price of Bitcoin (BTC) as these measures will force governments and central banks to print money in response to economic disruptions.
Increased money printing will drive investors toward Bitcoin. While this could play out in the mid-term, strained markets look to the downside. There may be more selling before BTC blasts higher.
BTC Blast-Off!
According to Hayes, the liquidity boost from money printing will position Bitcoin as an attractive investment, ultimately fueling its growth. This explains his ‘love’ of tariffs, which contrasts with the prevailing bearish sentiment among investors.
In a follow-up statement, Hayes pointed to the prospective impact of Trump’s tariffs on the Japanese economy. He added that the policy would prompt the Bank of Japan to inject liquidity into the economy to counter tariffs.
In this scenario, Hayes predicted that the USDJPY exchange rate could rise to 160. The analyst said it would create trading opportunities for investors.
In an earlier statement this week, Hayes suggested that Trump’s tariff policy is a deliberate attempt to address global trade imbalances. He believes that tariffs can disrupt international trade, which would discourage foreigners from acquiring U.S. Treasury bonds.
According to Hayes, the Federal Reserve and the U.S. banking system will need to intervene to maintain the stability of the Treasury market, meaning they will have to increase the money supply.
Hayes also noted that if Bitcoin could hold the $76,500 mark until April 15, U.S. tax day, the Bitcoin market would have avoided some negative circumstances.
Bitcoin Drops in Panic Selling As Traders Unload
Bitcoin’s status as “digital gold” and a hedge against inflation has been challenged these days since its price actions somewhat mirror stock markets. This means that when stocks fall in the face of increased macro uncertainty, Bitcoin is also in decline.
On Thursday, U.S. stock indices plummeted following Trump’s tariff announcement. According to Yahoo Finance data, Trump’s tariffs erased over $2 trillion in the U.S. stock market yesterday.
The S&P 500 fell 4.8%, its largest one-day drop since June 2020. The Nasdaq Composite declined 6%, its worst day since March 2020.
Meanwhile, the Dow Jones Industrial Average dropped by 3.6%, and the Russell 2000 index fell by 6.6%, entering a bear market after losing more than 20% from its late-November highs.
Bitcoin also faced selling pressure. Bitcoin fell around 6% to $81,400 post-tariff announcement as investors turned risk-averse. However, this decline was relatively muted compared to previous market reactions to Trump’s tariff signals.
The flagship cryptocurrency has indeed shown stronger resilience during renewed market turbulence. Bitcoin’s prices still stay above $84,000.
According to Michael Saylor, Strategy’s Executive Chairman, Bitcoin faces selling pressure during market turmoil, which appears to show a correlation to stocks, due to its liquidity and availability.
When markets panic, investors sell assets they can easily liquidate to raise cash, and Bitcoin fits that description, Saylor explained.
He asserted that this short-term correlation doesn’t indicate a long-term trend. The Bitcoin bull believes Bitcoin’s fundamental value proposition could eventually lead to it decoupling from other risk assets.
CoinGecko data shows that the flagship cryptocurrency is currently trading at around $84,500, up 1% in the last 24 hours.
As Bitcoin rebounds, altcoins start recovering. Data shows that Ether is back above $1,800, while XRP stays above $2. The total cryptocurrency market cap currently sits at around $2.8 trillion.
Institutional demand appears to have waned. Farside Investors data shows that spot Bitcoin ETFs reported $99.8 million in net outflows on April 3, reversing their positive performance on Wednesday when investors poured $218 million into these funds.
Despite the pullback, BlackRock’s iShares Bitcoin Trust still netted $65.3 million on Thursday. Large investors will likely use market weakness as an opportunity to buy.
