The Implications of Trump’s ‘Liberation Day’ for Bitcoin and the Cryptocurrency Market

On Tuesday, major cryptocurrencies experienced gains as investor sentiment improved, buoyed by expectations that the tariffs announced by U.S. President Donald Trump for his “Liberation Day” on Wednesday would not be as harsh as previously thought. However, analysts still express concern over the potential consequences of a trade war on the markets.

Bitcoin’s
current trading price is around $84,900, reflecting a more than 2.5% increase within the last 24 hours,
according
to CoinGecko data. The cryptocurrency briefly surpassed $85,000 for the first time since the previous week.

“Traders are excited about Trump’s tariff statements for April 2 and seem to believe there will be more lenient policies than expected,”
Sid Powell, CEO and co-founder of Maple, stated in an email to Decrypt, adding that “tariffs always create volatility.”

“Following a series of declining prices, any relief could trigger FOMO and a rapid recovery for BTC,” he further explained.

However, he cautioned: “Risk assets like crypto may suffer if the tariffs end up strengthening the dollar or hindering global growth. While volatility is certain, tariffs invariably disrupt the market, and it’s crucial for investors to wait for clarity on the anticipated softer policies.”

The rise in BTC aligns with the fluctuations seen in stock markets and other “risk-on” assets, as investors remain apprehensive about Trump’s unpredictable tariff discussions. On Tuesday, the president confirmed he had settled on a plan, which appeared to boost market confidence in resolving a long-standing issue.

Notable altcoins, including
Ethereum
,
Dogecoin
, and
Solana
, also saw price increases. ETH was trading at $1,917, a 4% rise in the past day; DOGE was just above $0.17—a 3% increase. Cardano gained 2.5%.

These cryptocurrencies, along with Bitcoin, faced significant downturns in the preceding weeks due to rising concerns that a global trade war could lead to stagflation—a detrimental combination of stagnant growth and escalating inflation—amid disappointing economic indicators. The March Purchasing Managers’ Index revealed the fastest price increases since mid-2022, with factory activity showing signs of contraction. Last week, consumer confidence recorded by the Conference Board fell to its lowest point in four years.

“From a risk management standpoint, it’s prudent for the market to stay on the sidelines until the ramifications of Trump’s tariffs become clearer,” stated Pedro Lapenta, head of research at Hashdex, in a message to Decrypt
, adding that “global markets will likely experience continued volatility as the tariffs unfold.”

He optimistically remarked that the surge in crypto prices on Tuesday indicated that “the market is transitioning into a buyer’s mode, expecting a less severe effect from the tariff announcements.” He observed that institutional interest was “on the rise.”

Other risk-on markets also showed slight gains on Tuesday, with the tech-centric Nasdaq and S&P 500 increasing by 0.87% and 0.38%, respectively. Meanwhile, traditional safe-haven gold continued its upward trajectory.

Trump is set to announce the tariffs with immediate effect during a Rose Garden ceremony at the White House on Wednesday, expressing that he is not worried about their short-term consequences.

In a correspondence to Decrypt, Joe DiPasquale, CEO of crypto fund manager BitBull Capital, mentioned that investor optimism has increased regarding the tariffs being more selective, potentially excluding certain countries and avoiding aggregate duties on specific products.

“We believe this has contributed to the modest recovery in the crypto markets,” DiPasquale stated. “However, the broader market remains cautious since the ultimate impact of the tariffs will hinge on their final details and execution. Consequently, while a sense of optimism exists, the situation is still evolving and investor sentiment could fluctuate as further information becomes available.”

Edited by James Rubin