How Trump’s incoming tariffs may threaten crypto markets

On March 1, President Donald Trump’s tariffs on goods from Mexico and Canada are expected to take effect, according to Reuters. Though not yet officially confirmed, the proposed 25% tariffs are anticipated to wield significant impacts on the broader economy, including cryptocurrency markets.

“Bitcoin, often seen as a hedge against inflation or economic instability, could experience heightened volatility as investors react to new tariff policies,” Kadan Stadelmann, CTO of Komodo Platform, told TheStreet Crypto.

For one, the dramatic shift in tariff policy is expected to introduce economic uncertainty and potentially destabilize both traditional and digital asset markets. Some analysts suggest that the growing correlation between the S&P 500 and cryptocurrencies indicates that digital asset markets will likely experience volatility similar to that of traditional markets. Bitcoin, in particular, is increasingly being treated more like a risk-on asset, with its value often rising and falling alongside traditional financial markets.

This is most evident in the way Bitcoin and traditional stocks move together during periods of economic turbulence. For example, rising geopolitical tensions in the Middle East last fall triggered a drop in Bitcoin’s value, while spot Bitcoin ETFs logged major outflows. Similarly, during the COVID-19 pandemic, Bitcoin saw increased correlation with the stock market, with the price of the world’s largest cryptocurrency regularly moving in sync with the U.S. stock market amid economic stress.

As tariffs threaten to roil traditional and digital asset markets in the coming weeks, the potential for disruption remains elevated. In the past, both Bitcoin and Bitcoin exchange-traded funds (ETFs) saw major losses and liquidations during market uncertainty. If the proposed tariffs on Mexico and Canada take effect, this trend is likely to continue.