The trade war that once roiled global markets is back, and this time Bitcoin is also part of the battleground.
On October 15, President Donald Trump declared that the United States is now in a trade war with China, stating:
“We’re in a (trade war) right now. We have 100% tariffs. If we didn’t have tariffs, we wouldn’t have a defense. They’ve been using tariffs against us.”
The approval further cemented a week of tensions since he threatened to impose 100% tariffs on imports from China.
Notably, this threat signals the beginning of a financial conflict, with ripple effects reaching deep into global markets.
As a result, traditional stocks fell and digital assets wiped out around $20 billion in open interest within 24 hours.
Bitcoin and Ethereum led the decline, extending what was already one of the rare “Red Octobers” for top cryptocurrencies, according to data from CoinGlass.
How will this affect Bitcoin?
Tariffs act like stealth taxes, making imports more expensive, raising input costs, fueling inflation, and putting pressure on central banks to keep interest rates high for an extended period of time. This combination often drains liquidity from risky assets such as Bitcoin.
A similar tariff announcement in 2018 caused a wave of volatility, sending Bitcoin below $6,000. This pattern will repeat in 2025.
Institutional investors have gradually shifted to defensive positions in gold, Treasury bills, and short-term bonds.
Meanwhile, Bitcoin, which still trades like a high-beta macro asset, is a collateral damage to the flight to safety.
However, the situation is becoming more complex.
Unlike the 2018 cycle, Bitcoin is no longer a retail-driven product, but a regulated asset class with rich ETF exposure and transparent derivatives markets.
Still, James Butterfill, head of research at CoinShares, warned in February that the immediate impact of tariffs would be “undeniably negative” for Bitcoin.
Butterfill said tariffs would slow growth, raise inflation expectations and encourage risk aversion. In such market conditions, Bitcoin reacts to liquidity trends, resulting in short-term volatility.
Traders are already betting that Bitcoin’s uptrend is unlikely to continue this month.
In polymarkets, the probability of Bitcoin reaching $130,000 by the end of the month is lower than the probability of it retreating to $95,000, reflecting how macro policy is driving digital asset sentiment.
However, Butterfill also pointed out that in a stagflation scenario, top cryptocurrencies would recover faster than stocks.
he said:
“In the long run, Bitcoin’s role as a hedge could strengthen, especially if tariff policies lead to economic instability.”
structural change
Meanwhile, Bitunics analysts said: crypto slate It said Trump’s confirmation has intensified economic tensions between the two countries and reshaped global risk appetite.
According to them, the impact is two-fold. One is a short-term liquidity shock, and the other is a medium-term structural shift in how capital views diversified assets.
In the short term, increased uncertainty requires financial institutions to avoid risk. Funds have been rebalanced towards cash equivalents and gold, causing widespread declines in liquid markets like cryptocurrencies.
They say leveraged traders facing margin calls will accelerate the cascade. Remarkably, that’s exactly what triggered last week’s $20 billion wave of liquidations.
But beyond the initial confusion lies another calculation. If the trade war remains limited to tariffs and export controls, slowing global growth could dampen demand for cryptocurrencies.
But if the conflict extends to financial payment systems, Bitcoin could re-emerge as a geopolitical hedge. In this situation, the US could introduce restrictions on cross-border dollar access and payment rails, forcing investors to seek alternatives.
In that scenario, digital assets move from “risk assets” to “replacement reserves.” The Bitunix team explains:
“A decline in confidence in the USD system could strengthen the narrative of Bitcoin as a ‘de-dollarization’ and ‘replacement reserve of value’ asset, creating structural support.”
(Tag translation) Bitcoin
