Messari Reports That Trump's Tariffs Could Turn Bitcoin Into An Inflation Hedge

According to analysis from Messari, Bitcoin, the largest cryptocurrency in the world, could serve as a hedge against inflation if trade tensions from President Donald Trump's tariffs undermine the global dominance of the US dollar. "Over time, we believe that [tariffs] could lead to Bitcoin decoupling from U.S. stocks," Dylan Bane, a business research analyst at Messari, a cryptocurrency research firm, said. "It may increasingly be viewed not as a representation of tech stocks or risky trades, but as a reliable hedge against inflation and a long-term store of value." Although Messari expects Bitcoin to maintain a high correlation with the U.S. stock market in the near future, they forecast a significant change in the long term. Messari's Bane said: "The continued imposition of tariffs could drive economic change, leading to the separation of Bitcoin from traditional assets when it is recognized as an independent store of value." Currently, investors view Bitcoin as closely linked to the S&P 500, with correlations sometimes as high as more than 70%. "Most investors do not see Bitcoin as a truly independent store of value," Bane said, adding that tariffs could act as a catalyst to undermine "the role of the U.S. dollar as the world's reserve currency." This is an increasingly supported viewpoint among financial leaders. Last month, Larry Fink, CEO of the world's largest asset management company, BlackRock, stated that the US dollar is at risk of being replaced by Bitcoin. "If the United States cannot control its debt, if the deficit continues to rise, America risks losing its position [as a reserve] to digital assets like Bitcoin," Fink said.

This news comes in the context of America increasingly concerned about inflation, as the chairman of the Federal Reserve this week cited "high uncertainty" amid ongoing trade tensions. Federal Reserve Chairman Jerome Powell angered Trump on Thursday after emphasizing that his tariffs could exacerbate inflation and create an economic downturn. "The firing of Powell can't come fast enough!" Trump said on social media. In the context of these developments, Bitcoin analysts see an opportunity to rekindle interest in cryptocurrency, especially as it serves as an alternative to centralized and traditional monetary systems. Bane said: "The deeper economic instability and the loss of institutional trust... may also drive greater interest in cryptocurrencies in general because the financial infrastructure is not dependent on any government or monetary authority." Bitcoin is currently trading at around $84,000 after surpassing its all-time high of $109,000 in January.