Why Bitcoin Is a Great Alternative in Trade Wars

In the wake of Trump's sweeping "Liberation Day" tariffs and escalating global trade tensions, investors across India are witnessing unprecedented market volatility. The Indian rupee recently hit a two-week low, with volatility rising to 4.5%, the highest since August 2023. Amidst this economic turmoil, many are asking: Are the tariffs going to affect crypto? The answer is both yes and no - while cryptocurrency markets have shown sensitivity to tariff announcements, Bitcoin is emerging as a potential safe harbor in increasingly choppy economic waters, leading many to consider whether it could be the best coin to invest in 2025, given the current climate. 

What is the Current Trade War Situation? 

Since April 2025, global markets have been rocked by a series of aggressive tariff implementations. President Trump's tariffs include a 10% baseline on all imports with significantly higher rates for specific countries – 34% for China and 20% for the European Union. These represent the most aggressive trade measures since the 1930s, driving a 25.9% drop in total crypto market capitalization and wiping out approximately $1 trillion in value. 

For context, tariffs averaged just 1-2% for much of recent history, and even during previous trade tensions in 2018-2019, they only peaked near 3%. The current escalation represents a fundamental shift in global trade policy with far-reaching implications for all financial markets, including cryptocurrencies. In such an uncertain environment, many investors are reevaluating their strategies and asking which is the best crypto to invest in 2025 to weather ongoing volatility and seize potential opportunities. 

How Tariffs Impact Traditional Markets 

Tariffs are government-imposed taxes on imported goods and services, used as tools for economic or political leverage. Their immediate effects include increased import costs, potentially higher inflation, and disruptions to global supply chains. When countries implement tariffs, their trade partners often retaliate, creating a cycle that can slow global economic activity. 

In India, economists now expect the rupee to reach 88/$1 by March 2026, with tariff-related volatility potentially denting earnings of certain sectors by up to 250 basis points in fiscal 2026. These macroeconomic pressures create an environment where investors naturally seek alternatives to traditional fiat currencies and stock markets. 

Will Tariffs Affect Crypto? The Crypto Market Response 

Following tariff announcements, cryptocurrencies have demonstrated clear sensitivity to these economic policies. The crypto market shed $180 million in a single 24-hour period in early April, a 6% decline in total value to $2.75 trillion. Bitcoin dropped from nearly $88,000 to just over $82,000, while Ethereum fell from $1,934 to $1,797. 

This market reaction reflects how cryptocurrency, once viewed as entirely separate from traditional finance, has become increasingly integrated with broader economic sentiments. As a result, more investors are now asking, "Are the tariffs going to affect crypto?" Risk-off sentiment during trade tensions tends to push investors away from volatile assets like cryptocurrencies. However, this effect is not uniform across all digital assets, prompting many to reassess which might be the best crypto to invest in 2025 as market conditions continue to evolve. 

Why Bitcoin Stands Apart During Trade Wars 

Despite general market downturns, Bitcoin has shown unique characteristics that position it well during trade tensions, qualities that have many analysts and traders considering it the best coin to invest in 2025. 

• Limited Supply Cap: Unlike fiat currencies that can be devalued through monetary policy, Bitcoin's fixed supply of 21 million coins creates scarcity similar to gold. 
• Non-Sovereign Status: Bitcoin operates outside governmental control, making it immune to direct manipulation during trade disputes. 
• Outperformed Traditional Safe Havens: Bitcoin has outperformed gold over the past year, five years, and even fifteen years. 
• Relative Stability: While Bitcoin has declined, its drops have been less severe than those of altcoins, with Bitcoin down 19.1% compared to Ethereum's 40% and memecoin drops exceeding 50%. 
• Store of Value Potential: During currency devaluations that often accompany trade wars, Bitcoin's role as "digital gold" becomes more compelling. 

For Forex Traders: New Opportunities in Uncertain Times 

Forex traders understand better than most how currency valuations respond to geopolitical tensions. Trade wars historically lead to volatility in national currencies as countries implement competitive devaluations to maintain export advantages. This "race to the bottom" creates both challenges and opportunities for currency traders. 

Bitcoin provides forex traders with a unique instrument that operates 24/7 across global markets without the direct influence of any single central bank. When fiat currencies become weaponized in trade disputes, Bitcoin offers an alternative trading vehicle with different correlation patterns and risk characteristics. 

For traders in India, where cryptocurrency adoption is surging post-Trump tariffs (with exchanges like WazirX and CoinDCX reporting 30-40% volume increases), Bitcoin represents a potential hedge against rupee volatility while offering exposure to global markets regardless of bilateral trade restrictions. 

Risks and Considerations in Trading Bitcoin 

While Bitcoin shows promise during trade tensions, investors should remain aware of its limitations. Volatility remains Bitcoin's most obvious challenge when evaluated as a safe-haven asset. Additionally, regulatory responses to economic uncertainty could target cryptocurrencies as governments seek broader economic control measures. 

For Indian investors specifically, regulatory clarity remains a work in progress, creating additional uncertainty beyond market factors. Cryptocurrency investments should form part of a diversified portfolio strategy rather than a complete alternative to traditional assets. 

The Long-Term Outlook of Bitcoin Trading in Trade Wars 

As trade tensions continue evolving, Bitcoin's role in the global financial ecosystem may strengthen. Institutional investors are already re-evaluating Bitcoin as a non-sovereign reserve asset in their modern portfolios. If current tariff policies lead to sustained inflation and currency instability, Bitcoin's fixed supply model could become increasingly attractive. 

With India now proposing dramatic tariff reductions in trade negotiations with the US, the impact of trade policies on both traditional and cryptocurrency markets remains fluid. This ongoing uncertainty has many investors asking, "Will tariffs affect crypto" in the long run, as they seek to anticipate how future economic policies might shape digital asset performance. What's certain is that Bitcoin's unique properties continue attracting attention during periods of economic uncertainty, suggesting its role in trade wars may only grow in importance. 

For investors navigating these complex waters, understanding both traditional economic indicators and Bitcoin's unique response patterns will be essential to developing resilient portfolio strategies in an era where tariffs and trade tensions show no signs of disappearing.