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How do tariffs stir up crypto asset prices?
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To put it simply, tariffs are tolls that countries charge for imported goods and services. If a country charges a tariff on a certain imported product, the importer has to pay extra money to the government of that country. This extra cost is often passed on to consumers, making things more expensive.
If the United States imposes a 25% tariff on imported steel, American buyers will have to pay 25% more for foreign steel. This makes American steel mills happy because their steel is less expensive and more competitive. However, American companies that use steel as a raw material may be in trouble because their costs have increased.These economic changes do not occur in isolation. Financial markets react to tariff announcements based on expectations about corporate profits, economic growth, inflation, and possible retaliatory measures by other countries.
Tariffs may affect the price of crypto assets through the deterioration of risk sentiment. Tariffs will bring economic uncertainty, making investors feel that the risk is too high and they dare not hold assets such as crypto assets that they think are risky, so they will choose to sell them. Although some people hope that Bitcoin can maintain its value in times of economic turmoil like digital gold, judging from market performance, many people still regard it as a high-risk asset and sell it at the slightest sign of trouble.
Reduced global capital flows. Trade restrictions may lead to reduced global economic activity and capital flows. When there is less money in the entire financial system, the demand for highly speculative investments such as crypto assets may also decline.
Bitcoin
Stablecoins
Utility tokens
Different crypto assets, different reactions
Different crypto assets may react differently to tariffs
