Since Donald Trump's tariffs were introduced, the global economy has been in the red. Financial markets have contracted sharply, to the point that the International Monetary Fund (IMF) has estimated that the risks weighing on the economy are "significant, mainly due to the tightening of financing conditions." The IMF points to a context of "high uncertainty about economic policy and the publication of indicators that surprised by their downside.".
The taxes decreed by the President of the United States have also harmed Bitcoin. As investors fled the riskiest assets to focus on traditional safe havens, Bitcoin fell back below the $80,000 mark. It collapsed to $74,400 before stagnating. The entire crypto market was in the red, with significant losses for most altcoins. Many holders began to fear the return of a sustained decline.
A "huge loser": angry Trump boosts Bitcoin's price
After weeks of decline, the price of Bitcoin has finally recovered. Although Trump's tariffs continue to dominate the news, Bitcoin has climbed above $90,000. For the first time since the beginning of April, the queen of cryptocurrencies has even allowed itself to return above $94,000. Bitcoin is still far from its all-time high of $109,000, but it is erasing some of the losses of recent weeks.
To explain this rally, we will first highlight Donald Trump's threats against the chairman of the United States Federal Reserve, Jerome Powell. The president believes that the head of the central bank, which is responsible for issuing the dollar and ensuring its stable exchange rate, is "always late and wrong." Very angry, he even called Powell "a huge loser.".
Donald Trump believes Powell is slow to cut interest rates. While the president is not the only one capable of firing the head of the Federal Reserve, he could do everything he can to complicate his life and force him out. The prospect of his dismissal was welcomed by crypto investors, unlike traditional financial markets, which plunged further. Donald Trump subsequently reassured everyone by stating that he "never intended to fire him." He admits that he wants "him to be a little more active with his idea of lowering interest rates.".
The success of Bitcoin ETFs
Also worth mentioning are massive liquidity injections into Bitcoin-based Exchange Traded Funds (ETFs) in the United States, which made a remarkable debut on Wall Street last year. As Cryptoast reports, more than a billion dollars were invested at the beginning of this week in Bitcoin-based index funds. This is the first time since January and the inauguration of the new president that the funds have attracted so many institutional investors. Everything suggests that these massive liquidity injections have boosted the value of Bitcoin.
Under these conditions, many investors hope that Bitcoin will continue to recover in value, surpassing $95,000, followed by $100,000. According to Arthur Hayes, co-founder of BitMEX and chief investment officer of Maelstrom, Bitcoin is expected to rise back above $100,000 following the latest decisions by the US Treasury.
The Treasury has decided to buy back some of its debt, i.e., government bonds, more quickly. The US Treasury has stepped up its debt repurchase program to stabilize financial markets, which could contribute to weakening the dollar. These factors are likely to support Bitcoin's recovery in the coming days and weeks.
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