Bitcoin may rise as trade war impacts global economy

Economic analysts are forecasting significant disruptions to global financial systems due to ongoing trade conflicts, with potential long-term benefits for Bitcoin (CRYPTO:BTC).

According to Jeff Park, an analyst at Bitwise, trade wars could lead to inflationary policies that weaken fiat currencies, driving demand for alternative stores of value like Bitcoin.

"The tariff costs, most likely through higher inflation, will be shared by both the US and trading partners," Park stated in a February analysis.

He emphasised that this economic strain could push countries to address weak growth by adopting more aggressive fiscal policies.

Consequently, Bitcoin may see increased adoption as a hedge against currency depreciation.

Ray Dalio, an economist and hedge fund manager, echoed similar concerns.

In an April post, he described tariffs as “stagflationary for the world as a whole,” explaining how they simultaneously slow growth and raise prices.

Dalio warned that growing debt levels and trade imbalances could lead to a fundamental shift in the global monetary system.

The short-term effects of these trade policies have already been felt in financial markets.

For instance, the US stock market experienced sharp sell-offs following tariff announcements.

Nic Puckrin, founder of Coin Bureau, noted that these developments heighten the risk of a US recession in 2025, estimating the probability at 40%.

Despite these challenges, some experts see potential opportunities.

Asset manager Anthony Pompliano suggested that lower interest rates resulting from economic turbulence could eventually drive up prices for risk-on assets like Bitcoin.

He remarked that while short-term pain is inevitable, it may pave the way for long-term gains.

At the time of reporting, the Bitcoin price was $83,444.43.