About the Author
Professor Andrew Urquhart is head of the Department of Finance at Birmingham Business School, University of Birmingham.
The views expressed here are his own and do not necessarily represent those of Decrypt.
President Donald Trump announced tariffs earlier this week ranging from 10% for the U.K. to 49% for Cambodia, levies which the president suggests will raise trillions of dollars for the U.S. economy and “make America wealthy again.” Lots has been written in the last day about whether these tariffs will cause a recession, their impact on the U.S. economy, and how China may react.
Given the uncertainty in the market, and the initial huge losses in all financial markets in the day following the announcement and expected losses, does this pose an opportunity for crypto?
Crypto as a flight to safety
Cryptocurrencies were initially seen as a safe-haven and hedge against traditional financial assets, but in recent times, they have been shown to be a poor safe-haven and only a weak hedge against downturns in financial markets. Thus cryptocurrencies have been increasingly correlated with stocks and bonds.
Given the tariff news and subsequent economic uncertainty, investors may seek out Bitcoin (and other cryptocurrencies) just have they have done in the past when there is high uncertainty in the market. Zach Pandl, head of research at Grayscale, notes: “I think tariffs will weaken the dominant role of the dollar and create space for competitors including Bitcoin. Prices have gone down in the short run. But the first few months of the Trump administration have raised my conviction in the longer term for Bitcoin as a global monetary asset.”
Bitcoin is deflationary, has predictable supply, and often labelled “digital gold” and therefore investors may see it (and other cryptocurrencies) as a safe way to hold their wealth during these extreme times of economic and political uncertainty.
Market activity
There has been quite a lot of activity in cryptocurrency companies looking to go public in recent months. Circle, the U.S.-based stablecoin issuer of USDC, is going public. The company filed an S-1 form with the Securities and Exchange Commission on Tuesday, with the stock trading under the symbol CRCL.
The company has reported $1.7 billion in reserve income from its stablecoin operations at the end of 2024. Further, Ripple, Kraken, and Gemini are all rumored to be eyeing IPOs, consequently demonstrating that many in this industry see this as the time to go public, offer shares, grow, and become more part of the traditional financial system.
What’s more, price activity has been positive over the last year. When Donald Trump became president of the U.S. for the second time in November, Bitcoin jumped to an all-time-high of over $75,000 initially, and then topped out at over $109,000 in January. However in recent months, Bitcoin has retraced back and floats around the $80,000 mark.
But institutions have continued to be attracted to cryptocurrencies, especially since the launch of the Bitcoin spot ETF in January 2024. According to a survey by Ernst and Young in early 2025, 89% of institutional investors aim to increase their exposure to the digital asset in 2025, and 59% will allocate more than 5% of their whole portfolio. This is a huge amount, and 68% of them said they would buy regulated ETFs of Solana or XRP the moment they were listed.
Further, the stablecoin market continues to grow, with a total size of over $230 billion, according to DefiLama. Therefore, cryptocurrency markets see no end in sight and activity is as booming as ever.
Regulatory clarity
Cryptocurrency has lacked regulatory clarity since it became mainstream in 2008. The previous administration, including SEC chair at the time, Gary Gensler, regulated crypto by enforcement action, such as the high-profile cases involving Coinbase and Ripple Labs.
Gensler conducted around 100 enforcement actions against cryptocurrencies in his nearly hours years as SEC chair. However, many in the industry argued that regulation by enforcement doesn’t work, and the SEC needed to provide more guidance and a robust regulatory framework to work with the cryptocurrency industry.
The Financial Innovation and Technology (FIT) for the 21st Century Act brought some clarity, against SEC Chair Gensler’s wishes, in May 2024 and provided some guidance for the market. Trump, during his 2024 electoral campaign, said he’d “fire SEC Chair Gary Gensler on day one” if he were elected. And although Trump didn’t do this, Gary Gensler resigned in January 2025, seeing the writing on the wall.
Since then, the SEC has been quite positive about cryptocurrencies, with SEC Commissioner Hester Peirce vocally positive about the market and setting up a crypto task force to work on integrating the industry into the market. Regulatory clarity was always seen as the biggest hurdle for cryptocurrencies to overcome to gain widespread adoption, and given clarity may be on the horizon, it can only signal good news for the market.
The Strategic Bitcoin Reserve
One of the most interesting, and probably most unlikely events, of the start of the Trump administration was the announcement of the Strategic Bitcoin Reserve. On March 2, Trump announced that the reserve would include Solana, Cardano, Ripple, and Ethereum, as well as Bitcoin, aiming to make the U.S. the “Crypto Capital of the World” and support industry growth.
The executive order was signed on March 6 to establish this reserve, funded by the Treasury’s already forfeited bitcoin and non-bitcoin digital assets. Although currently there are no plans for the US to buy more digital assets to fund this reserve, the fact the US government is using as a reserve can only be seen as a positive for the market.
However, as ever with crypto, and any market, predicting market movements is a fool’s game. As Isaac Newton put it, you can “calculate the motions of heavenly bodies, but not the madness of the people.”
Pendl believes Bitcoin will hit new all-time-highs this year, and given the activity in the cryptocurrency ecosystem and the financial and political uncertainty, there is no question it’ll be an interesting year ahead for cryptocurrencies.
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