By Michael Scott
The Donald Trump administration is looking for a targeted approach to trading partners, a move that will ease recession fears and lift the Bitcoin sentiment.
Scrutiny into the market activity shows Bitcoin regained bullish momentum to stage a 2.7% rally on Sunday, March 23. The recovery follows reports that the Trump administration signals a targeted approach to the April 2 tariffs. The report suggests it would omit sector-specific duties besides the reciprocal tariffs imposed on the major trading partners.
Crypto Market Recovery
The crypto market staged higher gains on Sunday afternoon following Wall Street Journal and Bloomberg publications that the White House would narrow its tariff strategy. Bitcoin surged roughly 12 hours following the reports to trade above $86,500. It portrays resilience after the volatile spells witnessed when BTC plunged to $81,200.
The pioneer crypto registered 3.3% intraday gains coinciding with a 1.2% surge in the entire market, CoinGecko data shows. The gains are attributed to the shift from the broader tariff to the more targeted, easing the investors’ concerns of causing economic disruption.
The downtrend witnessed last week emerged from market fears following Trump’s declaration of April 2 being a “Liberation Day”. The announcement portrayed plans to impose sweeping tariffs across various sectors.
The Wall Street Journal publication cited Treasury Secretary Scott Bessent’s announcement that the Trump administration targets tariffs on 15% of nations with trade imbalances.
The tariff shift coincides with the Federal Reserve’s (Fed) recent projections indicating it would hold the rates steady. The Consumer Price Index (CPI) also witnessed a cool down at 2.8% from February numbers, prompting some investors to perceive it as an indicator of easing the financial conditions.
Changing Tariff Approach to Favor Bitcoin
Grayscale’s researcher Zach Pandl notes that though tariffs hardly directly impact Bitcoin and crypto prices in the short term, Trump’s trade policies are a constituent of the larger trend. This is sweeping the digital assets in the broader macro uncertainty.
The high policy uncertainty has recently forced investors to lower their portfolio risk, affecting the digital assets class.
Recent Bloomberg publications reveal that the implemented and intended tariffs have impacted over $1.8 trillion worth of global trade. The effect arises from 25% of the duties targeting steel and aluminium and 25% for non-compliant USMCA products. Besides the 10% for Chinese imports, Trump has proposed 25% tariffs targeting EU goods.
The European Bank executives have warned that the US will become the origin of financial crises that will spread globally. Bloomberg Economics project a 0.7% reduction in the US GDP, with inflation set to rise by 0.4%. This occurs as Trump indicates the tariffs are economic measures to address illegal immigration and trade imbalances.
Bitcoin To Hit New Peak?
Former crypto exchange BitMEX chief Arthur Hayes is bullish that Bitcoin would recover from the dip to set a new all-time high (ATH) that would precede another correction. In the Monday, March 24 X post, he revealed that BTC would regain the upward movement to $110,000, though temporarily, as it would revisit the $76,500 price.
The optimism emerges from the macroeconomic shifts, particularly as the Fed transitions to Quantitative easing (QE) for treasuries. The departure from quantitative tightening (QT) is historically linked to driving liquidity into the financial markets.
Hayes downplayed the fears that tariffs would have an impact in the short term. Instead, he considers QE to expand the money supply with the capital injection set to stimulate investment and the economy. As such, the pivot towards easing the monetary policy has been a bullish catalyst in recent weeks.
Fed’s Policy Shift
The indication by Fed Chair Jerome Powell to lower the QT from $25 billion to $5 billion monthly in April signals the likely end of tightening by May, with QE to follow.
The transition is set to bring along capital that could propel BTC and altcoins to the next bull phase. An aggressive stimulus measure could trigger an unprecedented surge in digital asset prices, as witnessed during the COVID-19 pandemic.