Market uncertainty is rising as US President Donald Trump signals he could return to aggressive tariff policies. While these developments have contributed to short-term weakness in Bitcoin’s price, a new report from crypto asset manager Grayscale suggests the longer-term impact could be bullish for the leading digital asset.
In the report, Grayscale notes how increasing tariffs and protectionist policies could push the U.S. economy into stagflation—a period marked by rising inflation and stagnant economic growth. Historically, stagflation has been negative for traditional assets like stocks and bonds, but beneficial for scarce commodities.
“Bitcoin is too young to know how it will behave in historical periods,” the report said, adding, “but historical data suggests that stagflation tends to be negative for traditional asset returns and positive for rare commodities like gold.”
To support this claim, the report cites the 1970s, a period of intense stagflation when gold appreciated at an annual rate of around 30% and was significantly higher than inflation. Grayscale suggests that Bitcoin, often referred to as “digital gold,” could behave similarly under similar economic conditions.
Beyond inflationary concerns, the report also looks at the geopolitical implications of Trump’s tariff agenda, which it says could undermine global trust in the U.S. dollar and dollar-centric financial systems.
“If trade tensions lead to weakened ties to the U.S. economy and/or U.S. dollar-centric financial markets, countries may accelerate diversification of their foreign exchange reserves,” Grayscale said. Such a shift could encourage greater adoption of decentralized assets like Bitcoin as part of this diversification strategy.
*This is not investment advice.
