- Macroeconomic uncertainty is spurring institutional adoption of cryptocurrencies.
- The crypto market’s response to tariffs and a temporary tariff pause underscores its sensitivity to geopolitics.
- Experts warn of a potential bull trap.
Escalating trade tensions could accelerate institutional adoption of cryptocurrencies. ForkLog gathered views from industry experts.
After Donald Trump’s statement on April 2 on the introduction of new tariffs, the digital-asset market reacted with a sharp decline. However, on April 9 the sector rebounded amid a pause on rates for a number of countries.
Shifting sentiment
Analysts at Santiment noted that trader sentiment “predictably flipped bullish” after the tariff pause.
? Trader sentiments have predictably flipped bullish with the US 90-day pause on tariffs. Crypto may rally for a bit as retail catches up with the news, but beware of the high level of FOMO and buying on ‘kick the can down the road’ news on a topic that has remained unresolved. pic.twitter.com/u7hhIfhpvA
— Santiment (@santimentfeed) April 9, 2025
“The cryptocurrency market may rise for a while as retail investors catch up with the news. But caution is warranted: a high level of FOMO and buying on the back of a postponement of decisions on an unresolved issue can lead to an overbought asset,” the experts warned.
An alternative to traditional finance
In the long term, such instability could work in the industry’s favour, Cointelegraph was told by Wave Digital Assets CEO David Siemer.
According to him, amid uncertainty, traditional investors are increasingly viewing cryptocurrencies as a diversification tool.
Blockchain solutions are becoming especially sought after as legal and economic restrictions tighten, Siemer added.
He explained that financial instruments based on distributed-ledger technology serve as an alternative to traditional banking networks, which are subject to the pressures of geopolitics.
Cryptocurrencies are losing independence
Allbridge.io cofounder Andrey Velikiy commented to ForkLog on the current situation:
“We have always viewed bitcoin as a safe haven — a tool capable of offsetting risks in traditional financial markets. But due to growing institutional participation and a shrinking number of crypto-anarchists, cryptocurrencies have begun to correlate with stock markets, often falling faster because of lower liquidity and high volatility.”
The expert noted that although the Trump administration was initially perceived by the community as friendly, current events have not met expectations.
Velikiy also expressed skepticism about the prospects for an altseason.
“In previous cycles, growth in bitcoin was usually followed by growth in alts, but now such hopes are in doubt, as the market has become more of a venue for speculation in memecoins, which reduces its strategic significance,” he added.
An “Austrian” view
Economist-libertarian Evgeny Romanenko believes it is extremely difficult to predict the impact of tariffs on the crypto market with precision.
“What is absolutely clear to us from economic theory is that the scale of Trump’s ‘tariff cudgel’ is historically unprecedented and will worsen the state of affairs both in the United States and in the economy of the country against whose goods tariffs have been introduced — and that is the entire developed world,” the expert said.
Romanenko stressed that in such conditions volatility in the market may increase, but it is impossible to predict participants’ behaviour with certainty.
“TradFi and cryptocurrencies have at their core one factor — the production of fiat money by the banking system on the basis of central banks, starting with the Fed,” the economist noted.
This factor determines effective demand, which influences both securities markets and digital assets. Although a short-term correlation between the sectors is possible, their nature remains fundamentally different, “which rules out a long-term match,” Romanenko believes.
In his view, the coming crisis only strengthens the position of cryptocurrencies as mainstream and as an alternative to traditional assets. Despite the challenges of integrating into centralised systems, digital currencies continue to serve as a lifeline amid mounting problems in the fiat system, as evidenced by the actions of both private and institutional players.
The economist believes that bitcoin’s long-term growth is driven by fundamental demand, including from institutional investors. Its recognition as digital gold is already obvious to millions of users. The rise in the first cryptocurrency’s price, even accounting for fiat issuance, reflects the asset’s enduring popularity.
Rising uncertainty
Trader Vladimir Cohen said that trade wars and global economic instability negatively affect financial markets, including the cryptocurrency sector. He believes that tensions between the United States and China heighten uncertainty, increasing volatility in both traditional and digital assets.
He thinks that an escalation of the conflict between China and the United States could accelerate the use of cryptoassets for settlements and capital flight from countries with unstable economic policies. However, such growth remains local, since major stablecoins, for example USDT and USDC, are exposed to the risk of asset freezes at the behest of U.S. authorities.
Cohen also highlighted a fundamental problem for the cryptocurrency market — its deep linkage to the TradFi sector.
“The main inflows and outflows of liquidity depend on traditional markets, whether ETF bitcoin funds or the shares of crypto-oriented companies like Strategy,” he explained.
Such interdependence leaves digital assets vulnerable to sharp market swings. Last week it seemed odd that cryptocurrencies did not react to the stock market’s decline. Cohen considers this manipulation that temporarily pinned their price.
Speaking about Trump’s policy, the trader points out that protectionism could stoke inflation. If the United States begins raising tariffs, imported goods will become more expensive. That will increase pressure on the Fed, reducing the chances of interest-rate cuts. Without monetary easing, institutional interest in cryptocurrencies, according to Cohen, will remain limited.
DeFi stands to benefit
DeFi platforms may nevertheless benefit, says Concrete & Glow Finance cofounder Nicolas Roberts-Huntley. In his view, this is especially true for providing access to capital and yield while bypassing traditional systems.
Roberts-Huntley noted that DeFi services offering transparent and global solutions are “increasingly strategically significant”.
“Bull trap”
Analysts at QCP Capital called Trump’s trade policy “a trigger for a sharp rally in global markets”. However, they warn that if China responds symmetrically, “a brisk rally can quickly turn into a classic bull trap”.
An unexpected policy shift briefly calmed the market, yet the situation remains unstable. At the same time, analysts note a decline in “short volumes”, as well as the popularity of call options with a $100,000 strike and December expiry.
“Healthy consolidation”
CryptoQuant contributor Axel Adler Jr noted that the mining ban in China, which triggered a 53% drop in bitcoin’s price, undermined trust in the system in the short term, whereas trade wars have provided an opportunity to demonstrate the cryptocurrency’s resilience to external economic shocks.
The mining ban in China had fundamental consequences for BTC: it undermined trust in the system and caused a 53% price drop. Trade wars, in contrast, demonstrated Bitcoin’s resilience to external economic shocks.
The current 28% correction looks like healthy consolidation… pic.twitter.com/KH6yk9Dnkb
— Axel ?? Adler Jr (@AxelAdlerJr) April 10, 2025
According to him, “the current 28% correction looks more like healthy consolidation than a signal of a deep crisis”. This indicates that geopolitical risks matter less to holders than direct technological threats, Adler Jr said.
On April 8, former BitMEX CEO Arthur Hayes said that new U.S. tariffs could trigger a shift of capital into digital gold.