Trump Launches Another Tariff Storm, Will Bitcoin Be the Hedging Tool Against Tariff Risk? A Replay of Black Monday

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“Black Monday” Strikes Again, Sending Shockwaves Across Global Markets.Since Trump announced a massive tariff hike, the financial markets have been in a state of continued turmoil. From traditional stock exchanges to the crypto sector, risk assets are undergoing a broad-based sell-off.

According to CoinGecko data, over the past 24 hours, the total global cryptocurrency market capitalization has dropped by 9.7%, shrinking to $2.53 trillion. Bitcoin (BTC) briefly fell below the $77,000 mark, while Ethereum (ETH) plunged below $1,500.

The traditional financial markets suffered even more dramatic losses:

• U.S. Stocks Plummet: Within the three trading days following the executive order announcement, all three major U.S. indices tumbled sharply. The S&P 500 recorded its largest single-day drop since the pandemic. Panic swept through the markets, with approximately $5.4 trillion in market capitalization wiped out.
• Global Markets Collapse: European and Asia-Pacific markets were not spared. The Japanese stock market triggered circuit breakers, South Korea’s KOSPI index plunged 7%, and the Hang Seng Index dropped more than 1,100 points in a single day. In total, global stock markets lost $6.6 trillion in value.
• Gold Fails as a Safe Haven: As a traditional safe-haven asset, gold posted a rare sharp decline, falling 3.18% in a single day, with a total drop of 6.67% since April 3, marking its largest pullback in recent months. Many investors are now realizing that in times of high volatility in U.S. dollar credit, gold may no longer provide sufficient protection.

This Is Not a Simple Market Correction — It’s a Structural Capital CrisisAll the data above points to a deeper, structural capital crisis, not a routine market correction. Capital is urgently seeking a new safe haven.But here’s the paradox: the crypto market is also plunging — so why is it still being considered a new refuge for capital?To answer that, we need to start with the U.S. dollar system itself.

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Understanding the U.S. Dollar System:Bilateral Trade Flows + Bilateral Capital Flows

Today’s global economy and monetary structure operate under a U.S. dollar-dominated system. You can use the dollar to purchase virtually anything in any country around the world. As the sole dominant currency, the U.S. provides global demand while non-U.S. economies accumulate dollars. In simple terms:The U.S. produces the currency,Non-U.S. economies hoard the currency;The U.S. exports demand,Non-U.S. economies export supply.This creates massive bilateral trade flows.

Thanks to financial liberalization and the expansive nature of fiat credit, the dollar system has deeply penetrated the global economy under conditions of unrestricted capital mobility. Dollar-denominated credit/deposits and dollar-based assets/liabilities connect the U.S. and the rest of the world, forming immense bilateral capital flows.

Re-examining “Reciprocal Tariffs” Through the Lens of the Dollar System.Once we understand how the dollar system functions, we can better analyze the impact of reciprocal tariffs. Regardless of the country, high tariffs are designed to reduce imports and encourage domestic production, thereby narrowing trade deficits.

But when the U.S. reduces imports, it effectively lowers the amount of dollars flowing overseas, which in turn leads to a drying up of global dollar liquidity.

The actions taken by U.S. authorities since early 2025 clearly reflect this trend:

• Mid-March 2025: The U.S. Treasury announced an increase in mid- and long-term Treasury issuance for Q2, with the 30-year bond hitting a record-high single issuance volume.
• April 2025: The SEC and CFTC began tightening oversight on cross-border capital flows, especially scrutinizing offshore dollar routes to emerging markets.
• Federal Reserve Chair Jerome Powell recently hinted that quantitative easing (QE) may soon be restarted, with a focus on purchasing U.S. Treasuries.
• Alongside reciprocal tariffs, the U.S. is also advancing its “critical supply chain reshoring” strategy. Key industries such as semiconductors, automobiles, and green energy have been added to a new Treasury Department subsidy and incentive list.

Summary：In the short term, tariff policies may correct trade imbalances, but they undermine the global circulation of the U.S. dollar. To counteract this impact, the Federal Reserve will be compelled to restart the “Brrr” machine — in other words, expand liquidity through monetary easing. This could include, but is not limited to:Expanding the Fed’s balance sheet；Lowering interest rates；Even coordinated bond purchases with the banking system.

Massive Dollar Liquidity Injection: A Bullish Signal for the Crypto Market

The Federal Reserve’s balance sheet expansion — commonly referred to as the “Brrr” policy — tends to trigger a flood of global liquidity, resulting in what is often described as assembly-line-style quantitative easing. This approach frequently leads to asset bubble effects.

In traditional financial markets, bubble assets often crash alongside market panic, while the crypto market, thanks to increasing maturity and changes in investor composition, is gradually shifting from retail speculation to institutional allocation. As the U.S. dollar begins to circulate more widely, many hedge funds and family offices are diversifying risk by allocating a portion of their portfolios to Bitcoin, Ethereum, and other major digital assets.

On-chain data reflects this trend clearly:

• The number of Bitcoin-holding wallet addresses hit an all-time high of 54.71 million;
• Large Ethereum transfers skyrocketed, with over 50% of high-value transactions bypassing centralized exchanges (CEXs);
• Crypto exchanges in Switzerland, Singapore, and the UAE reported net capital inflows rising by over 60%;
• The BTC spot price on platforms like Coinbase and Binance traded at a premium of up to 2.5% over CME futures.

In addition to “hard” assets like Bitcoin and Ethereum, stablecoins have played a crucial role during this wave of policy-driven market shifts. Thanks to their dollar peg and strong liquidity, stablecoins have become vital tools for capital conversion and hedging.

Faced with high volatility induced by dollar overissuance, institutional investors are increasingly making dynamic allocations between traditional and digital assets — with stablecoins serving as a vital bridge.

Stablecoins such as USDT and USDC not only facilitate crypto trading, but also serve as key tools for short-term arbitrage and risk hedging. Their market capitalization and velocity of circulation have seen significant growth, further reinforcing the growing importance of the crypto market as part of the global safe-haven asset system.

Looking back at 2020, when the Fed launched massive quantitative easing, Bitcoin and gold soared together — a clear signal of what happens when liquidity overflows the system.

If the Fed once again opens the floodgates, the crypto market could very well replay that scenario:A new valuation surge for digital assets may be on the horizon.

Conclusion

Against the backdrop of escalating trade frictions, tariff storms, and policy shocks, traditional safe-haven assets are increasingly failing to provide protection. As a result, capital is being forced to explore new paths for risk hedging and value preservation.

The cryptocurrency market, with its inherent strengths in decentralization, limited supply, and global liquidity, is emerging as a key arena for global capital reallocation. From Bitcoin to Ethereum, from stablecoins to innovative fintech products, the crypto space is gradually reshaping the future structure of financial value.

In the face of sustained dollar overissuance and structural adjustments in traditional financial markets, adopting a rational perspective on the core value of crypto assets, and building a well-balanced, diversified portfolio may become an effective strategy for risk mitigation and wealth appreciation.

At the same time, regulatory policies, technological innovation, and market sentiment shifts will continue to shape the trajectory of the crypto market in the years to come.