Bitcoin made winning headlines after Trump’s election win, only to end the first quarter of 2025 in the red. From the start of 2025, Bitcoin registered a shakiness, weighed down by speculation that the Fed may have limited scope for further interest rate cuts.
In early March, there was an executive order by Donald Trump to establish a strategic Bitcoin reserve for the United States. The reserve will be funded using Bitcoin seized in criminal and civil forfeiture cases, with no plans for the U.S. government to purchase additional Bitcoin at this time. Investors found the move underwhelming.
The recent market volatility and a broader risk-off environment due to Trump trade tensions have triggered a pullbackin Bitcoin. Still, bitcoin has gained 2.8% past month (as of April 19, 2025 and at the time of writing) compared with 7.2% decline in the SPDR S&P 500 ETF Trust (as of April 17, 2025). iShares Bitcoin Trust ETF IBIT has retreated only 0.7% past month.
The above-performance is showing that Bitcoin has been displaying strong resilience amid the tariff-led market turmoil. Fed Chair Powell once labeled Bitcoin as “virtual and digital gold,” while billionaire investor Ray Dalio advised people to invest in hard assets like gold and Bitcoin to avoid the effect of a looming debt crisis.
Bitcoin is often touted as a hedge against inflation and has a fixed supply. This move contrasts with traditional fiat currencies, which central banks can issue in unlimited quantities. Thus, in times of inflation, the value of fiat currencies tends to fall.
Meanwhile, Bitcoin can preserve wealth amid high inflation due to its limited supply. In any case, Trump’s high import tariff imposition is expected to stoke inflation globally. Thus, Bitcoin should do well in a such an inflationary environment.
While MicroStrategy MSTR has long been the poster child for corporate Bitcoin adoption, it’s no longer alone.GameStop (GME), and Rumble (RUM) have recently begun accumulating Bitcoin as part of their balance sheet strategies. These new entrants are likely to strengthen institutional adoption, creating the prevailing buying pressure in the market.
Although Fed Chair Jerome Powell recently adopted a less-dovish tone, citing concerns about tariff-driven inflation and hesitating to commit to rate cuts, things could turn out to be more dovish in reality. If the U.S. economy slows due to the trade war, the Fed may be compelled to cut rates more quickly than previously expected. Lower rates normally favor risk-on assets like Bitcoin by reducing the opportunity cost of holding non-yielding assets.
