Bitcoin experienced a significant surge, reaching an impressive peak of over $126,000 at the beginning of last week. However, on Friday, the markets were jolted by President Trump’s latest trade war maneuver: a threat to impose “massive” new tariffs on China.
The aftermath of President Trump’s announcement was devastating. It led to the largest single-day loss in history as more than $19 billion worth of heavily leveraged crypto futures positions were liquidated.
Bitcoin’s value plummeted briefly below $110,000 but has since made a partial recovery and is currently valued at $113,494 according to CoinGecko. Meanwhile, gold set a new record on Monday by reaching $4,099 per ounce.
This situation raises an important question: Is Bitcoin still viable as part of the so-called debasement trade?
Concerns about excessive government debt and rampant money printing have driven investors towards alternative assets. This month saw digital assets like Bitcoin being chosen alongside gold and stocks as hedges against currency devaluation.
Despite Friday’s sudden crash and only modest recovery thereafter, experts informed Decrypt that there remains potential for growth in Bitcoin—and other cryptocurrencies—as part of this strategy.
“I believe there’s another decade left for the [debasement] trade,” stated Greg Magadini from Amberdata Derivatives. “Global inflation makes holding U.S. dollars or long-term treasuries riskier,” he explained further suggesting such conditions could favor Bitcoin going forward.
The past has shown that when the Federal Reserve adopts expansionary monetary policies—like during Covid-19 when interest rates hit zero—Bitcoin prices soared dramatically higher than before.
The U.S.’s central bank had aggressively raised interest rates but is now reducing them again significantly which suggests continuation unless they remain elevated according to Pepperstone strategist Dilin Wu speaking with Decrypt.
“In my opinion,” she remarked “only sustained increases in real interest rates coupled with fiscal discipline would end this cycle.”
If real rates rise considerably over time while institutional funds exit through large ETF withdrawals then perhaps we might see changes affecting how people view using bitcoin against debasement risks otherwise its upward momentum stays strong.”
This leaves us wondering about other coins/tokens? Although down roughly ten percent post-Friday’s crash compared their all-time highs many others fared worse:
Solana/XRP ranked fifth/sixth respectively managed partial recoveries yet remain thirty percent below earlier peaks reached earlier year!
Grayscale Research Head Zach Pandl assured readers if current trends persist major altcoins should continue appreciating too!
Pandl commented it may take days before crypto markets fully recover from recent trader position washouts adding temporary dips likely precede fresh highs across numerous tokens!”