The second quarter of 2025 was supposed to be a time when cryptocurrencies and other risk assets could soar, but analysts are now predicting increased volatility after U.S. President Donald Trump announced new tariffs that could shake up the global economy.
Here’s why this matters:
The Bullish Hopes vs. Trump’s Tariffs
After a tough first quarter, where Bitcoin, Ethereum, and traditional markets like the S&P 500 and Nikkei 225 saw some of their worst performances in years, everyone was hoping for a strong rebound. Crypto giants like Coinbase and Bitcoin miners have been hit hard, losing billions. QCP Capital reported that over $160 billion in market cap was wiped out in just a few days, leaving the market looking for its next boost.
Now, all eyes are on President Trump’s tariff announcement, dubbed “Liberation Day.” The potential tariffs on trade partners could be a game-changer. The market is uncertain whether they’ll be severe (up to 25%) or lighter (around 10%).
What Could Happen Next?
Some experts, like Sid Powell from Maple Finance, believe that if the tariffs are lighter than expected, the market could see a “risk-on” surge, pushing prices up. On the other hand, Nicolai Sondergaard from Nansen Research argues that if tariffs ease, the crypto market could still follow its usual seasonal patterns and experience a recovery from the rough start to 2025.
However, there’s still uncertainty. While Trump’s tariff policies might not escalate into a full-blown trade war, the confusion over the details could keep markets on edge for a while.
The Fed’s Role and Market Liquidity
A key part of this story is the Federal Reserve’s stance on interest rates. The Fed typically holds back from raising rates in uncertain times, which is good news for Bitcoin and other assets that thrive in low-interest environments. But with Trump’s policies creating additional volatility, it’s unclear how the Fed will respond. Analysts are hoping for at least two rate cuts this year, but if liquidity remains tight, Bitcoin’s price might struggle to break past $100,000 without a major surprise in economic data.
What’s Next for Crypto?
In the short term, risk assets, including crypto, might remain under pressure. As Trump’s tariffs continue to unfold, we may see traditional equities like global stocks pushing higher, while the U.S. could be sidelined by its own policy decisions. Crypto investors, however, should prepare for a “choppy” recovery, at least until there’s more clarity about the broader economic picture.
For now, the crypto market remains in limbo, waiting for answers and hoping for lighter policies from the White House to give it the momentum it desperately needs.
The next few weeks could determine whether 2025’s second quarter becomes the rebound investors are waiting for—or just another bump in the road.
