| This was supposed to be Bitcoin’s moment to shine. Born out of the global financial crisis, Bitcoin was created to be independent of the mainstream financial system. When other assets sink, the original cryptocurrency is supposed to offer shelter from the storm. That’s why scores of advocates have described the token as a store of value, akin to digital gold.
Right now though, the world’s biggest digital asset is dropping alongside other financial assets as markets react to President Donald Trump’s imposition of the steepest American tariffs in a century.
Bitcoin has fallen around 4% since the tariff announcement on Wednesday afternoon. In the same period, the Nasdaq 100 fell 5.5%, the most in more than two years; the SP 500 slumped 4.8% - the most since 2020; and gold is down less than 1%, and still up for the year.
“The backing up stock market along with Bitcoin declining and gold rising is proving Bitcoin is more leveraged beta than digital gold,” said Mike McGlone, senior commodity strategist at Bloomberg Intelligence. The gravitational pull of the stock market on Bitcoin is getting stronger, McGlone said, while gold’s negative correlation to US equities is increasing. In the meantime, the interconnection between Bitcoin and gold is down steeply from last year, according to crypto data tracker Glassnode. “Crypto has traded less with gold, which is at all-time high, and more with the broader risk asset space,” said Zaheer Ebtikar, founder of crypto fund Split Capital. That’s ironic, as cryptocurrencies and most related businesses aren’t expected to be directly affected by the new tariffs.
“Logically, it obviously makes zero sense that crypto is keying on tariffs since, by definition, crypto is probably the only industry in all of the financial markets that is NOT affected in any way by tariffs (remind me, exactly which digital goods are being taxed?),” said Jeff Dorman, chief investment officer at Arca.
There’s one notable exception: Bitcoin miners based in the US, who rely on overseas manufacturers for their hardware.
“The tariffs may significantly affect the Bitcoin mining sector, as a large share of current mining server imports has been sourced from Malaysia, Thailand and Indonesia,” said Matthew Sigel, head of digital assets research at VanEck.
For Bitcoin and its investors facing an uncertain market landscape, the stakes are high.
If it’s not digital gold, what is it, then, exactly? Bitcoin’s persistent volatility has limited its adoption as a payment mechanism, a reality which appeared to concern Jack Dorsey.
In a video interview with Presidio Bitcoin published on X this week, he said if the token were to fail it would be because of “irrelevance”.
“If it just ends up being a store of value and nothing more, I don’t think it gains relevance at all,” he said. “I think it has to be payments, for it to be relevant on the every day.” |
