The U.S. President’s recent trade tariff warning has sparked a rise in demand for Bitcoin and gold, as investors turn to safer assets amid economic uncertainty.
The president issues a warning on social media that nations that support a planned BRICS currency or try to replace the US dollar as a reserve currency will be subject to 100% tariffs.
“In international trade or elsewhere, any country that seeks to replace the U.S. dollar should welcome tariffs and bid America farewell,” he states.
- Bitcoin’s Market Reaction
Bitcoin’s price fluctuates in response to these trade policies. It currently trades near $104,500, according to Binance data, and is within 5% of reaching a new all-time high. However, ongoing concerns over trade tariffs slow Bitcoin’s growth.
Following Wednesday’s Federal Open Market Committee (FOMC) meeting, Bitcoin briefly rebounds from a $100,000 dip scare. The U.S. Federal Reserve maintains a hawkish stance, keeping the federal funds rate between 4.25% and 4.50% due to persistent inflation concerns.
The Fed acknowledges a strong labor market but states that economic risks remain balanced. Uncertainty persists over future interest rate cuts due to ongoing policy shifts in the U.S.
Market reactions include:
- 10-year Treasury yields rising 4 basis points to 4.581%.
- The U.S. Dollar Index increasing 17 basis points to a session high of 108.1.
- Concerns over a bearish long-term outlook for cryptocurrencies due to the Fed’s pause on rate cuts.
Institutional Investments in Bitcoin
Institutional investors show growing interest in Bitcoin-related assets. Norges Bank Investment Management, the world’s largest sovereign wealth fund, significantly expands its holdings in Metaplanet and MicroStrategy, now valued at approximately $500 million. Given MicroStrategy’s large Bitcoin reserves, investors view it as a key proxy for Bitcoin exposure in traditional finance.
Meanwhile, Bitwise Asset Management secures initial approval from the U.S. Securities and Exchange Commission (SEC) for an exchange-traded fund (ETF) tracking Bitcoin and Ethereum. The SEC approves Form 19b-4, marking a crucial step before trading begins. However, Bitwise awaits approval of Form S-1 before officially launching the ETF.
Regulatory Challenges for Bitcoin Adoption
Despite growing institutional interest, Bitcoin adoption as a reserve asset faces regulatory resistance. European Central Bank (ECB) President Christine Lagarde dismisses Bitcoin as an unsuitable option for central bank reserves, reinforcing skepticism among global financial regulators.
However, on-chain derivatives market activity suggests strong investor engagement, countering fears of an extended sell-off before Bitcoin’s next major rally.
Gold Reaches Record High Amid Economic Uncertainty
Gold surges to an all-time high of $2,799 per ounce early Friday, extending its monthly gain to 6.5%.
Investors turn to gold as a safe-haven asset amid concerns over the U.S. President’s tariff policies and rising geopolitical tensions. Expectations that protectionist policies could drive inflation higher further strengthen gold’s appeal as a hedge against price increases.
Additionally, the Federal Reserve’s pause on rate cuts, combined with a hawkish economic outlook, pushes U.S. Treasury yields higher and strengthens the U.S. dollar. While this adds pressure on non-yielding assets like gold, strong investor demand keeps prices elevated.
Market Outlook
Despite ongoing economic uncertainty, investors continue to be drawn to gold and bitcoin. As global markets keep a close eye on trade and monetary policy changes to inform future investment plans, institutional Bitcoin investments rise and gold hits all-time highs.
