While traditional currency markets grappled with the escalating global trade landscape, propelled by U.S. President Donald Trump’s announcement of new import tariffs, Bitcoin defied the uncertainty by scaling yet another record high of $117,685.96. This surge highlights a growing trend: cryptocurrencies are increasingly asserting their independence and appeal in the face of macroeconomic instability.
The U.S. dollar saw gains on Friday, fueled by Trump’s declarations, which included a 35% tariff on Canadian imports starting August 1, and plans for blanket levies of 15% or 20% on most trade partners. This created a turbulent environment for major fiat currencies. The Canadian dollar, for instance, fell 0.27% to C$1.3693, experiencing a knee-jerk drop of over 0.5% immediately after the tariff news.
Canada in the firing line
“Canada finds itself in the firing line and it’s obviously not the end of the week we wanted to see,” noted IG market analyst Tony Sycamore. “You’d expect to see risk assets fall because there is a risk of escalation from several parties. The tariff headlines so far have been largely ignored, but Canada’s… It’s something which I don’t think the market was braced for.”
The euro also dipped 0.2% to $1.1682, heading for a weekly decline of about 0.9%, while the risk-sensitive Australian dollar slipped 0.11% to $0.6581 as market sentiment soured. Brazil’s President Luiz Inacio Lula da Silva vowed to reciprocate “like-for-like” if threatened 50% tariffs take effect.
Bitcoin’s new record
Despite these headwinds in conventional markets, the rally in Bitcoin and other digital assets suggests a potential shift in investor behavior. DBS FX and credit strategist Chang Wei Liang attributed Bitcoin’s new record partly to “the resilience of global risk appetite even in the face of Trump tariffs, as well as high optimism over U.S. legislative proposals.”
This optimism stems from the upcoming “Crypto Week” in the U.S. House, where lawmakers are set to advance several legislative measures aimed at providing regulatory clarity for digital assets. Such initiatives are seen as crucial for encouraging further institutional adoption and mainstream integration of cryptocurrencies.
Ether’s rise
Echoing Bitcoin’s ascent, Ether similarly jumped more than 6% to a five-month high of $3,017.81, underscoring the broader strength within the cryptocurrency market amidst traditional financial anxieties. While the U.S. dollar strengthened against a basket of currencies, up 0.2% to 97.79 and set for a 0.8% weekly gain, the decoupling of major cryptocurrencies from these traditional currency woes points to their evolving role as alternative investments in uncertain economic times.
“For the moment, I think the uncertainty is just playing to a little bit of U.S. dollar stability, and I wouldn’t be too surprised if that holds for another couple of weeks,” said Ray Attrill, head of FX research at National Australia Bank, reflecting on the dollar’s strength. However, the crypto market’s concurrent surge suggests a narrative where digital assets are increasingly viewed as a hedge against, or at least a distinct alternative to, the volatility of traditional fiat currencies and geopolitical trade disputes.
