Bitcoin Shows Resilience Even in the Face of a Tariff War

Since I published my most recent edition of Proof of Words, the Trump administration has gone ahead with its tariff plans, but then ended up zigzagging around when it came to the details. 

While the stock market took a significant hit from the “tariff wars,” Bitcoin showed to be quite resilient, trading between $80,000 and $84,000 for most of that time (after an initial dip).  

Additionally, we saw more developments when it comes to state-led Bitcoin adoption, with New Hampshire and Florida advancing their Bitcoin reserve bills. 

So let’s talk about that! 

Trump’s “Tariff Wars” Sent BTC on Quite a Rollercoaster Ride, But It Showed Its Resilience Once Again! 🎢

Tariffs have been a significant focus for the Trump administration. 

The idea is simple: Make the U.S. more appealing to businesses and manufacturers by offering a better environment than in other countries. Companies that want to avoid higher tariffs should set up shop in America. 

While this may sound sensible at face value, it typically leads to a trade war, which is what we’re seeing play out now. 

On April 2nd, which President Trump dubbed “Liberation Day,” his administration announced a baseline tariff of 10% on all imported goods to the U.S., with additional tariffs imposed on specific countries and products.

However, some clauses were in place for particular industries or countries, meaning certain parts of the world would pay far more than this.

To call the next seven days eventful would be an understatement.

After digesting the initial shock, various countries (and economic zones, such as the EU) began negotiating with the Trump administration in an effort to lower the tariffs imposed on them. 

President Trump's main focus was China, one of the U.S.'s largest trading partners.  🇨🇳

At first, he announced a 34% tariff, which China countered with its own 34% tariff. The U.S. was next to move, increasing tariffs on Chinese imports to 145%, and China retaliated with 125%. This back and forth is ongoing.

Long story short, capital markets were hit hard by the trade war that emerged between these two nations. 

On April 7th, stocks took a sharp hit. The S&P 500 dropped so much that some pundits already spoke about the next bear market. 

That fear also spread to other assets such as Bitcoin but it was one of the first assets to recover again. 

Back to the trade wars. 

After Black Monday on April 7th, the Trump administration's tone changed. 

They began talking to other nations, and on April 9th, President Trump announced a 90-day pause on tariffs, except for those imposed on China. 

If you’re interested in the full details of all tariff announcements, the New York Times has a great timeline of all the events. 

The trade wars have shown how quickly equities react to tariffs and disruptions in international trade. At one point, especially when new tariffs were announced, it seemed there was no end to the pain, hurting everyone with a 401 (k) or any other stock-heavy investment portfolio.  

Once Trump eased on the tariffs, equity markets recovered quickly again, but there is still a lot of uncertainty out there. 

Now, where does Bitcoin come into all of this? 

Well, within the Bitcoin community, there’s a lot of discussion about Bitcoin’s role as a safe-haven asset. 

Most of that conviction comes from being in the community long enough; if you have been, that theory plays out as Bitcoin has performed incredibly well as a store of value, often during times of economic turmoil.   

And now, considering that Bitcoin only experienced a 6% 24-hour price drop at the peak of the tariff saga and recovered even to outperform equities at one point, it shows us once again how valuable it can be to hold Bitcoin as a store of value during challenging global market conditions. 

If you go back a few years, 10% price drops in a day were not something unusual for BTC. Now, even in the face of a tariff war, Bitcoin is holding up great!

Moreover, the more we see a decoupling from Bitcoin and equities, the more people will start taking a closer look and reconsidering their portfolio allocation–both on Main Street and Wall Street. 

It’s almost poetic that Bitcoin gets ignored countless times, but once the world goes a little crazy, it often outperforms other assets, making it just too good to be ignored. 

Satoshi really did something special here. 

We now need to wait and see what kind of tariffs will be announced next, as I’m sure this wasn’t the last back-and-forth, and then we can see how Bitcoin will react. 

New Hampshire & Florida Advance Their Bitcoin Reserve Bills 📃

Last month, I wrote about the strategic Bitcoin reserve bill and the Executive Order in March that launched it all. 

Such a reserve would be federal and controlled by the Treasury, which is great! 

The U.S. government will start acquiring Bitcoin and using it as a reserve currency, as it should, because there is no better alternative (at least, in my humble opinion). 

However, the great thing about the U.S. is that every single state can further strengthen its finances and reserves as well. We saw this before March, when several states announced potential Bitcoin reserve bills. 

This week, we also heard some very positive news from New Hampshire and Florida. 

Both states had already passed the first stages of approval, either in the House or by a banking committee. 

In New Hampshire, the bill proposes investing up to 10% of its general fund and other approved funds in Bitcoin and precious metals. The House Insurance and Banking Committee also unanimously approved the bill in Florida. It still has two more committees before it goes to the full House.

Why is this a big deal? 

Well, while it’s a big boost for Bitcoin if the U.S. government has a reserve, it’s even more bullish for states to have their reserves as well. 

Not only would it decentralize Bitcoin on government balance sheets (like the intent behind Bitcoin, to have decentralized money), but it’s also a unique opportunity for each state to play to its strengths. 

Texas, for example, has become the mining hotspot in the U.S., if not even the world. Florida could use many of its solar energy capabilities and mine BTC. Other states might have different incentives. 

Through these reserves, every state can become more independent from the federal government and build its own reserves. 

We’ll have to wait for the next couple of votes in New Hampshire and Florida, as well as other states that still have the ability to follow the same game plan. But for now, we can celebrate the small wins, and I’m eager to see which states pass the bill and add Bitcoin to their reserves in the future. 

Your fellow stacker in Sats, 

Patrick Lowry