Bitcoin is ripping, just shooting up over the $98,000 threshold in recent days. Amidst the excitement, a shadow looms: Trump's proposed tariffs. Might these tariffs, as pointed out by Jerome Powell himself, be the catalyst that causes havoc in the cryptocurrency world, directly affecting the value of Bitcoin? BreakoutFear.com explores the wider significance, providing traders looking for clarity — not “hopium” — with plain talk terrorist analysis.

Tariff Trauma: Inflation's Unseen Hand

Now, the surprise Trump tariff policies, especially the “Liberation Day” tariffs announced in April 2025, are coming under scrutiny, and they should be, for good reason. These tariffs go as far as setting a baseline of 10% on all imports, climbing even higher for certain countries—34% for China, and 20% on the European Union. They might substantially worsen inflation. We're talking double-digit inflation in key sectors.

Consider beef, for example. Prices have already shot up almost 20% over the course of 2023. Tariffs would further worsen this, raising consumer prices even more. This continued inflationary pressure would likely continue to erode the value of fiat currencies, thus pushing more investors into alternative assets such as Bitcoin.

As of March, the annual increase in the consumer price index had slowed to 2.4%. This number is surprisingly low and a step down from the 2.8% figure released in February, reported by the U.S. Bureau of Labor Statistics. Those are the positive Commerce effects. The negative Trump’s tariffs could undo much of this trend, adding to inflationary pressures. The Fear & Greed Index even briefly fell below 20 in March and April as fears of tariffs began to weigh on markets.

Crypto's Wild Ride: Tariffs as a Tailwind?

Trade war, tariff, and trade tension uncertainty has also historically been reversed market-connected with a spike in interest in cryptocurrencies. The last big run in 2019 saw Bitcoin reach $3,700 in early January to over $13,000 in June. That boom was fueled by increasing fears over the escalating trade war. When Trump announced in 2018 that he would slap 25% tariffs on foreign-made cars and auto parts, panic rippled through the financial markets. The cryptocurrency sector took an especially hard hit.

The $TRUMP coin price spiked over 50% after Trump’s dinner with the top holders. This trend indicates that there is a link between his administration’s policies and crypto market speculation. And while correlation doesn’t mean causation, the trend is clear. Tariffs add a whole new layer of economic uncertainty, and uncertainty tends to lead investors toward safer bets or higher-risk/higher-reward assets like Bitcoin.

Several other factors are contributing to Bitcoin's recent surge, including:

Bitcoin's Boosters: More Than Just Tariffs

  • Global institutions diversifying away from USD assets: Institutions are looking to diversify away from USD assets, which benefits both gold and Bitcoin.
  • Approval of Bitcoin-linked ETFs: The SEC's approval of the first U.S. bitcoin-linked ETF, ProShares Bitcoin Strategy ETF (BITO), in October 2021, led to a price surge to $69,000.
  • Decline of the US dollar strength index (DXY): A decrease in the DXY has been driving upward pressure on Bitcoin's price.
  • Increased institutional confidence: Hundreds of millions of dollars have flowed into Bitcoin ETFs in recent weeks, indicating growing institutional confidence in Bitcoin.
  • Halving event: The halving event, which reduces the number of coins given as a reward for mining a block, has contributed to Bitcoin's price surge.

Powell's Pivot: A Regulatory Shift?

Just last week, Federal Reserve Chairman Jerome Powell suggested that there may be a relaxation of cryptocurrency and banking regulations. That’s a big deal and signals a welcome change in the Fed’s approach to the digital asset space. This is a big deal for the current state of the crypto market.

Powell just announced that banks should relax their cryptocurrency banking restrictions. He specifically cited the harsh measures taken against banks handling digital assets. He recognized the regulatory challenges of bringing digital assets into the traditional finance fold and urged for a clearer oversight framework. Powell reiterated that any such legislative framework would need to include all the usual consumer protections and transparency. He adamantly backs congressional moves to codify formal rules for stablecoins. He agrees that any legislation should pack innovation in while still providing meaningful risk control.

This possible regulatory turn, plus the inflationary effect of Trump’s tariffs thanks to the perfect storm that is Bitcoin. Easier regulations could attract more institutional investment. At the same time, increasing inflation may push retail investors toward Bitcoin as a hedge against currency devaluation.

Trump's tariffs introduce volatility, but also potential opportunities for strategic investments. Going forward, we would continue to watch inflation data, regulatory developments and a rising overall market sentiment. Until then, control your risk and trade wisely.