Bitcoin and Tariffs: A Stormy Ride
Bitcoin, the most famous cryptocurrency, has been on a wild ride lately. Its value has been going up and down like a rollercoaster, and one big reason for this is something called “tariffs”. These are extra taxes that U.S. President Donald Trump has put on goods from countries like China, Canada, and Mexico. Let’s look at three reasons why Bitcoin’s value goes down when Trump announces these tariffs.
Economic Uncertainty: Investors Get Worried
When Trump says he’s going to put tariffs on things, it makes people unsure about the economy. This uncertainty makes investors worried, and they start to avoid risky things like Bitcoin. Usually, Bitcoin is seen as a safe place to put your money when the economy is having problems, but lately, it’s been acting more like stocks, which are also risky[1]. So, when people get worried about the economy, both stocks and Bitcoin tend to go down.
Also, people are worried that Trump’s tariffs might cause a recession, which is when the economy gets really bad. Tariffs can make prices go up, which makes investors worried and they sell their risky investments, like Bitcoin[1].
Investors Look for Safer Places to Put Their Money
When the economy is uncertain, investors look for safer places to put their money. While Bitcoin is sometimes seen as a safe place, lately, investors have been choosing things like gold and the euro instead[1]. The Japanese Yen has also gotten stronger, which means people are choosing these things over Bitcoin when the economy is having problems.
This is partly because Bitcoin has been acting more like risky things lately, and partly because people think traditional safe places are more stable when the economy is bad. The euro has gotten stronger since Trump announced the tariffs, which means people are choosing real money over Bitcoin to protect their investments[1].
Bitcoin Reacts Fast to News, Even on Weekends
Unlike stocks, which you can only buy and sell during the week, Bitcoin can be traded any time, even on weekends. So, when Trump announces tariffs on a weekend, Bitcoin traders sell their Bitcoin right away, before the stock market even opens. This can cause the price of Bitcoin to drop suddenly[1].
Bitcoin is also very sensitive to news, so when something big happens, like Trump announcing tariffs, it can cause the price of Bitcoin to go up and down a lot, especially when the stock market is closed[1].
Bitcoin and Tariffs: A Complicated Dance
In simple terms, Bitcoin goes down when Trump announces tariffs because of economic uncertainty, people choosing safer places to put their money, and Bitcoin reacting fast to news. These things show how complicated the world of Bitcoin is, and how it’s affected by what’s happening in the economy and the world. If you want to invest in Bitcoin, it’s important to understand these things.
—
Sources:
– Cointelegraph
– CoinCentral
– Newsday