The Fallout From Trump’s Tariff Push

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By Matthew Hougan

The Trump administration wants a weaker dollar, even if it means ending its role as the world’s reserve currency. There are implications for bitcoin.

It’s hard to be an investor at times like this. The market is volatile and the news flow is constant.

Are the Trump tariffs a negotiating ploy or a permanent feature? Will we get a 90-day pause or not?

Financial media is full of market experts with bold takes. Scrolling through X, you might have seen a range of reactions from AQR’s Cliff Asness (“tariffs are terrible”), Pershing Square’s Bill Ackman (“tariffs are okay, but these are poorly designed”), or Professional Capital’s Anthony Pompliano (“tariffs can be great”).

It’s hard to know what to believe.

My strategy for dealing with confusing markets is to narrow my focus. Instead of speculating about all the things that might happen, I try to focus on the few things I’m confident will happen.

So when it comes to the tariff push, the thing I’m most certain of is this: The Trump administration wants a significantly weaker dollar, even if it means sacrificing the dollar’s role as the world’s sole reserve currency.

This has big implications for bitcoin. 

The Most Important Thing You’ll Read Today

The most important thing I read on Monday was this speech by Steve Miran, chairman of the White House’s Council of Economic Advisers. The speech was published by the White House on Monday, just as the tariff tantrum came to a head. I don’t think that was by accident.

I want to quote extensively from the speech because I think it’s that important:

The reserve function of the dollar has caused persistent currency distortions and contributed, along with other countries’ unfair barriers to trade, to unsustainable trade deficits. These trade deficits have decimated our manufacturing sector and many working-class families and their communities, to facilitate non-Americans trading with each other. …

… While it is true that demand for dollars has kept our borrowing rates low, it has also kept currency markets distorted. This process has placed undue burdens on our firms and workers, making their products and labor uncompetitive on the global stage, and forcing a decline of our manufacturing workforce by over a third since its peak and a reduction in our share of world manufacturing production of 40%.

The underlying message is clear: The dollar needs to go lower. 

What Does This Mean for Bitcoin?

This insight has both short- and long-term implications for bitcoin.

In the short term, I expect dollar weakness to be good for bitcoin. Over the past five years, bitcoin has had a -0.4 to -0.8 correlation to the U.S. Dollar Index (DXY), a measure that compares the value of the U.S. dollar to a basket of six major currencies. Dollar down equals bitcoin up. I expect this pattern will continue.

In the long term, the implications are even more positive. A shake-up in the global macro system creates an opportunity for new reserve assets to emerge. And that makes sense: Governments and companies turn to the dollar for international trade precisely because of its stability. When that stability comes into question, they have to look elsewhere.

My sense is that we will move from a single reserve currency (the dollar) to a more fractured reserve system, with hard money like bitcoin and gold playing a bigger role than it does today. In this context, the case for bitcoin is simple: When international dynamics are fraught and global currencies are in flux, where else can investors go for a scarce, global, digital store of value that sits outside the control of any government or entity?

As the old saying goes, “chaos is a ladder.”

In December, Bitwise predicted that bitcoin would end the year at $200,000. I still think that’s in play.

Risks and Important Information

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