Trump’s proposed tariffs would favor bitcoin

Donald Trump’s victory in the United States presidential elections this week places bitcoin (BTC) in an encouraging scenario. This is not only because the Republican plans to have reserves in the digital currency and promote the development of the industry behind it, but also because of his economic measures.

During his campaign, Trump proposed a 60% tariff on Chinese imports to promote local industry. This implies an increase in rates for the sector from 7.5% to 25% during his government mandate.

The trading company QCP Capital warns that, in this context, bitcoin could be positioned better than US market stocks. This is due, in part, to the fact that the costs of companies in the United States would grow in the face of these economic policies.

“As markets consider Trump’s proposed 60% tariff on China and fiscal concerns such as rising national debt, we expect BTC to have less of a risk premium compared to stocks, which could position it to outperform other risk assets,” QCP Capital commented on the matter.

The increase in tariffs proposed by Trump has also fueled fears of an increase in inflation in the country. Therefore, this could lead to fewer interest rate cuts.

“We are going to see the worst of both worlds: we are going to have higher internal prices for goods and some services… and we are not going to have a general improvement in the labor outlook or the salary outlook,” opined Daniel Alpert, managing partner of the investment firm Westwood Capital.

Even Stephen Moore, a conservative economist who has supported Trump’s proposals, has suggested that sharply increasing tariffs could be counterproductive for the U.S. economy.

“I don’t want us to drastically increase tariffs on imported products. Tariffs are taxes. And my concern is that if you take it too far, you’re going to get into a tit-for-tat situation,” Moore said.

A potential context like that, something that is still too early to foresee, could attract investors to bitcoindue to its anti-inflationary characteristic generated by its decreasing emission through halving. This is, as long as dollar inflation does not result in levels so high that they harm liquidity and risk appetite.

In this sense, although both US stocks and bitcoin are currently at all-time high prices, the digital currency could come out advantageous in such a scenario. Furthermore, due to the high volatility of the currency, its performance has historically been superioras the following graph shows.

It should also be noted that, after the result of the presidential elections, bitcoin spot demand soaredtaking its price to a new all-time high. Added to this was that, in the following days, the currency’s exchange-traded funds (ETFs) received capital inflows, which helped the price continue to rise.

In fact, yesterday culminated in total inflows on the day of $1.38 billion into US bitcoin ETFs, their highest ever. As seen below, until then, the record demand it had had in one day had been USD 1.05 billion in March.

Yesterday, the Federal Reserve (Fed), Central Bank of the United States, reduced rates by 25 basis points, as reported by CriptoNoticias. This is something that appears to have strengthened bullish market sentiment, which makes sense given that it increases the liquidity available to the markets.

ETFs could drive bitcoin’s rise

With this movement, bitcoin ETFs in the US market have accumulated USD 25.5 billion since their launch in January. According to QCP Capital, this is a figure that could continue to rise amid the current context.

“Unprecedented net inflows of $1.38 billion into BTC spot ETFs yesterday, coupled with optimism from Trump’s victory and a widely anticipated 25 basis point Fed cut, have propelled BTC to $77,000 early this morning ”explained QCP Capital.

For the trading firm, this scenario could encourage investment in bitcoin, taking its price, which can be seen below, to new all-time highs.

“This sustained optimism in BTC could also create a feedback loop, with rising ETF inflows driving up BTC prices, which in turn attracts more retail capital and systematic fund purchases as volatility declines,” QCP Capital ended.