Bitcoin, the world’s largest cryptocurrency, could serve as an inflation hedge if trade tensions sparked by President Donald Trump’s tariffs undermine the dollar’s global dominance, Messari analysis says.
“We believe that (tariffs) could lead to a decoupling of Bitcoin from the U.S. stock market over time. It may be increasingly viewed less as an alternative to tech stocks or a risk-on trade, and more as a reliable inflation hedge and long-term store of value,” said Dylan Bane, corporate research analyst at cryptocurrency research firm Messari.
While Messari expects Bitcoin to remain highly correlated with U.S. stocks in the near future, it predicts a significant shift in the long term.
“Ongoing tariffs could catalyze structural economic changes that lead to Bitcoin’s decoupling from traditional assets as it gradually gains acceptance as an independent store of value,” Messari’s Baine said.
Currently, investors view Bitcoin as closely correlated with the S&P 500, with correlations sometimes exceeding 70%. “Most investors do not view Bitcoin as a truly independent store of value,” Baine said, adding that tariffs could be a catalyst to weaken “the dollar’s position as the world’s reserve currency.”
This view is increasingly shared by financial leaders. Last month, Larry Fink, CEO of the world’s largest asset manager BlackRock, said the dollar is in danger of being cannibalized by Bitcoin. “If the U.S. cannot control its debt and if the deficit continues to expand, the U.S. risks losing its reserve currency status to digital assets like Bitcoin,” Fink said.
The news comes amid growing concerns about inflation in the U.S. The chairman of the Federal Reserve said this week that ongoing trade tensions have created a “high degree of uncertainty.” On Thursday, Fed Chairman Jerome Powell angered Trump by emphasizing that Trump’s tariff measures could increase inflation and lead to a slowdown in the economy. Trump said on social media: “Powell’s firing came too late!”
Amid these developments, Bitcoin analysts see an opportunity for renewed interest in cryptocurrencies, especially as an alternative to centralized and traditional monetary systems.
“The resulting broader economic uncertainty and institutional distrust … could also spark greater interest in cryptocurrencies, whose financial infrastructure is not dependent on any single government or monetary authority,” Bain said.
Bitcoin currently trades at around $84,000, having breached an all-time high of $109,000 in January.
