Bitcoin (CRYPTO: BTC) isn’t as safe as holding cash when economic times get tough. As a cryptocurrency, it’s volatile, and it’s nearly impossible to use it to buy something you might actually need, like a burrito.

But, in the case of how the economy will respond to the tariffs proposed by the Trump administration, it could be a very good asset to have on hand, especially if you’re worried about your purchasing power getting eroded. Here’s why.

Before getting into how Bitcoin could be a useful investment in the context of new tariffs in the U.S., it’s necessary to learn a little bit about how tariffs tend to affect the economy.

Tariffs are considered inflationary because they tend to increase the prices paid by consumers for goods and services. Businesses, facing increased costs for their inputs, increase their prices to maintain their margins, and consumers pay up because there are often no alternative places to buy what they need that are not also facing the same set of constraints. This means that the fiat currency held by consumers, like dollars, have less purchasing power as a result of tariffs.

Much like with the impact of monetary inflation derived from an increase in the money supply, there is no guarantee or expectation that wages will rise to match the newly increased prices for goods. Therefore, the same number of dollars will be chasing higher-priced goods, thereby requiring a decrease in the average level of consumption of those goods. Unless consumers can mitigate the decline in their purchasing power by holding an asset that retains its purchasing power in fiat currency, that is.

Bitcoin may not shield you from every tariff-driven price spike, but it’s less exposed to those economic risks than traditional assets like stocks, which are directly hit by declining margins and weaker global demand. Holding Bitcoin means partially decoupling from the fiat currency system, whose purchasing power is constantly at risk from political and policy decisions, including tariffs.

When tariffs reduce trade, they can damp demand for the exporter’s currency, potentially weakening it. However, for the importing country, especially one like the U.S., which has a trade deficit, reduced imports can momentarily strengthen the domestic currency by shrinking dollar outflows. However, if tariffs trigger retaliatory actions, reduce global growth, or spark inflation, the longer-term effect may be the dollar weakening, not strengthening, especially if foreign holders lose confidence in U.S. trade policy stability. And with the onset of retaliatory tariffs announced by China on April 4, it looks like that’s what will happen.