Escalating Tariffs and Countermeasures from Abroad May Bolster Cryptocurrency Adoption, Predicts VanEck
In these turbulent times of escalating trade tensions amongst the US, China, and the European Union, some financial analysts predict that Bitcoin might just thrive in the chaos. According to Matthew Sigel, head of digital assets research at VanEck, the repercussions of the latest US tariffs could prompt nations and corporations to turn towards digital assets.
Sigel voiced his thoughts publicly on social media, relating the recent wave of Trump's tariffs to a potential future overhaul of global trade operations. In his opinion, Bitcoin is no longer merely a speculative asset; it's gradually morphing into a tool for international transactions, particularly in energy trade.
He emphasized that China and Russia were recently found settling some energy trades using Bitcoin and other digital assets, echoing their anticipated moves. Moreover, Bolivia announced plans back in March to import energy using cryptocurrency, and French utility EDF (Electricité de France) is exploring the possibility of utilizing surplus electricity (currently exported to Germany) to mine Bitcoin.
His argument revolves around the increasing role digital currencies are playing in real-life trade, especially as nations start questioning their dependence on the US dollar. If countries such as China or the EU decide to distance themselves from dollar-based financial systems due to these trade tensions, Bitcoin could potentially gain acceptance.
Last week, Trump's executive order introduced a slew of tariffs to safeguard American manufacturing. This immediate market move saw Asian stocks plummet after China retaliated by imposing a 34% tariff on all US goods, set to go into effect on April 10. Cryptocurrency markets also suffered a decline, with Bitcoin, Ethereum, and other significant assets slumping in response to the news.
Sigel also pointed out that other factors like US Federal Reserve policy, ETF inflows, and dollar strength could impact Bitcoin's trajectory. He suggested that dovish shifts in rate expectations and rising liquidity usually pose a positive influence on Bitcoin. Additionally, signs of dollar weakness could bolster the "Bitcoin as a hedge" narrative.
Despite market volatility, spot Bitcoin ETFs listed in the US remained net positive, with around $600 million in YTD inflows returning in late March.
While Bitcoin's role in international settlements is becoming more evident, its full-scale adoption still faces numerous challenges, particularly regulatory scrutiny. As an illustration, the Bank for International Settlements (BIS) is focusing on real-world asset (RWA) tokenization, though Bitcoin's role in this scenario is less direct compared to stablecoins or asset-backed tokens.
However, Bitcoin's borderless design offers a potential workaround for entities facing trade barriers, though recent regulations aim to limit its misuse. As a tactical hedge rather than a mainstream settlement tool, Bitcoin's utility remains constrained by regulatory limitations and competition from other blockchain-based solutions. During trade tensions, its primary advantage lies in neutrality and accessibility, but widespread adoption hinges on overcoming compliance hurdles.
- Matthew Sigel, head of digital assets research at VanEck, believes that the latest US tariffs could lead nations and corporations to turn towards digital assets like Bitcoin due to the repercussions of the trade tensions.
- Sigel highlighted that Bitcoin is gradually morphing into a tool for international transactions, particularly in energy trade, citing China and Russia's recent use of Bitcoin and other digital assets in some energy trades.
- In his opinion, if countries such as China or the EU decide to distance themselves from dollar-based financial systems due to these trade tensions, Bitcoin could potentially gain acceptance.
- Despite market volatility, spot Bitcoin ETFs listed in the US remained net positive, with around $600 million in YTD inflows returning in late March.
- Despite its potential utility as a hedge during trade tensions, Bitcoin's full-scale adoption still faces numerous challenges, particularly regulatory scrutiny, and hinges on overcoming compliance hurdles.
