Trump is holding a $1.5 million fundraising dinner at Crypto Czar
President Donald Trump held a $1.5 million fundraising dinner at Trump National Golf Club in Sterling, Virginia.
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Bitcoin Price (Cryptography: BTC) It has skyrocketed 24% in the past month, pushing its value back to over $100,000 for the first time since February. Investors are once again regaining optimism with world-leading cryptocurrencies, but is it a good time to buy?
This is why Bitcoin prices are rising again, and why it’s better to wait for the current waves until the dust settles into tariffs and potential economic impacts.
Why investors are on board with Bitcoin
Bitcoin fell in stages, causing stock prices to plummet after President Trump announced numerous tariffs on imports. This caused Bitcoin to fall to around $76,000 in early April.
However, over the past few weeks, investors have reassessed their selling sentiment and have once again acquired stocks and cryptocurrency. The hope is that the Trump administration will settle trade transactions before it causes serious pain in the US economy.
For example, the administration recently released some details about a new trade agreement with the UK. This was the main reason why Bitcoin’s value bounced over $100,000. Details include 10% lower tariffs on the first 100,000 vehicles imported into the US, as opposed to 25%, as well as a tariff exemption on steel and aluminum.
Furthermore, China and the US have recently agreed to defeat the trade war. Tariffs on Chinese imports will decrease from 145% to 30% over 90 days, but trade contracts will be issued. China will reduce its tariffs from 125% to 10%.
Bitcoin is not directly affected by tariffs, but many investors buy and sell cryptocurrency based on tariff news. It appears that some Bitcoin investors now believe that the trade war with China will be resolved and other tariff transactions will be held before it hurts the economy.
A surge in Bitcoin optimism may be premature
I think there are several good reasons to be optimistic about Bitcoin’s future. Cryptocurrency recently gained a major institutional adoption with the launch of the Bitcoin ETF last year. The Trump administration has also adopted a lighter regulatory approach to cryptocurrency, and announced its strategic Bitcoin reserve just a few months ago.
All of these have been a positive move for Bitcoin’s long-term viability as an investment. However, there should be far more volatility in the short term due to the general uncertainty of tariffs and the economy.
First, the trade agreement between the US and China is not finalized. Imports from China still suffer a significant 30% tariff, and can be high or low by the end of negotiations, depending on how trade talks are conducted.
Even if the deal goes on for the next three months, the Trump administration shows it doesn’t bother to throw a wrench at previously established economic norms. It’s a bad thing for Bitcoin prices, as investors tend to respond strongly to negative economic news, just like the original tariff announcement.
How much does tariff affect the economy?
Furthermore, even if significant trade transactions with the country are made, rising consumer prices due to import duties could still affect the economy. For example, after some tariff exemptions have been made on cars, Ford recently said the prices of the three models would rise up to $2,000 due to tariffs.
The main point here is that there are still major questions about how much tariffs will affect the economy. Bitcoin investors have chosen to be optimistic with some of the positive news, but over the coming months we will learn more about how the economy is actually doing.
If you are interested in owning Bitcoin, it is best to wait until all trade transactions have been made with the country. Waiting a few months will give you a much better view of whether the Trump administration is holding the economy under bad policies or whether the trade fiasco is smoothing out.
Stock markets and Bitcoin prices are moving significantly based on almost a day’s tariff news, so buying now is flirting at its best ever – looks like a bad move.
Chris Neger has no position in any of the stocks mentioned. Motley Fool has a position and recommends Bitcoin. Motley Fools have a disclosure policy.
The Motley Fool is a partner at USA Today, providing financial news, analysis and commentary designed to help people control their financial lives. The content is produced independently of USA Today.
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