Potential Impacts of U.S Trade Agreements on Cryptocurrency Market Prices!
In the ever-evolving world of finance, the intersection of trade policy and cryptocurrency is becoming increasingly significant. Here's a look at how these two areas are intertwined and the impact they have on each other.
Russia and Iran are exploring the possibility of a gold-backed stablecoin for their mutual trade, joining a growing conversation about cryptocurrencies as a potential replacement for the U.S. dollar in international transactions [1]. However, trade tensions can have unexpected consequences. For instance, if sanctions block imports, they can ironically strengthen the local currency because there's less need to buy foreign cash [2].
The global supply chain for the powerful computers used in crypto mining has become a front line in the tech war between the United States and China. Meanwhile, the U.S.-China trade war has morphed into a deeper strategic rivalry that's splitting the global economy into two camps, with a possible division into two competing financial worlds [3].
Companies are looking at cryptocurrencies to protect themselves from trade wars, with stablecoins being especially appealing for managing company funds [4]. But the regulatory landscape is messy. In the United States, the SEC, CFTC, and Treasury Department are fighting for control over digital assets, creating uncertainty [5].
Trade policy, particularly tariffs and related trade tensions, significantly impacts the cryptocurrency market. High tariffs create a fragmented and unpredictable trade environment, which undermines global economic confidence, depresses trading volumes, and fosters risk aversion among investors [6]. This uncertainty, in turn, depresses crypto trading volumes and fosters risk aversion among investors, leading to market selloffs and downward price pressure on cryptocurrencies such as Bitcoin and Ethereum [6].
Tariffs making imports more expensive can lead to a decrease in foreign currency demand, potentially strengthening the domestic currency [7]. However, retaliatory tariffs can reverse any gains, and the unpredictability of trade spats can spook foreign investors, weakening the currency [2].
A single set of rules for cryptocurrencies, established through trade agreements, could change the crypto market in three big ways - more people using it, easier trading, and calmer prices [8]. The USMCA included a chapter on currency policies, showing that future trade deals would likely tackle monetary issues head-on [9].
The use of trade policies, such as tariffs and sanctions, can impact the value of a nation's currency. For example, the trade fight between the U.S. and China was a masterclass in how policy can steer money, with the dollar briefly strengthening while the yuan weakened when the U.S. hit China with tariffs [3].
Citizens in countries with devaluing currencies might invest in cryptocurrencies to shield their wealth from inflation [10]. On the other hand, countries locked out of the global banking system by sanctions might use digital currencies for international deals, driving up demand for them [11].
Notably, digital assets offer a new way to get around capital controls [12]. North Korea is infamous for using hacking and crypto to raise money and get around sanctions [13]. Iran has approved crypto payments for imports and has reportedly paid for them with Bitcoin [14].
The USMCA's embrace of digital commerce paves the way for a future where such currencies are part of the system. As of July 2025, 137 countries, accounting for 98% of the world's economy, are looking into a Central Bank Digital Currency (CBDC). Nearly 50 are already running pilot programs [15].
In summary, trade policies like tariffs indirectly but materially influence the cryptocurrency market by shaping macroeconomic and regulatory conditions that affect investor behavior, market liquidity, and operational costs. This often results in heightened volatility, price declines during tariff announcements, and shifts in capital allocation away from crypto assets. However, some cryptocurrencies may benefit from increased institutional interest if regulatory clarity improves amid this environment [6][7][8][9][10].
References: 1. CoinDesk 2. CNBC 3. Bloomberg 4. Forbes 5. Reuters 6. Investopedia 7. Investopedia 8. CoinTelegraph 9. USMCA 10. CNBC 11. CNBC 12. The Guardian 13. Bloomberg 14. CoinDesk 15. Financial Times
- Russia and Iran are considering a gold-backed stablecoin for their trade, moving towards using cryptocurrencies as an alternative to the U.S. dollar in international transactions, inviting discussion about their potential role in trade policy [1].
- The global crypto market is affected by trade tensions, as high tariffs create an unpredictable trade environment that undermines confidence, lowers trading volumes, and increases risk aversion, leading to market selloffs and downward pressure on cryptocurrencies like Bitcoin and Ethereum [6].
- The use of tariffs can have unforeseen impacts on a nation's currency, potentially strengthening the domestic currency if imports become more expensive [7].
- A single set of rules for cryptocurrencies established through trade agreements could result in increased usage, easier trading, and stable prices [8].
- Digital assets can serve as a means to bypass capital controls, as shown by the use of hacking and cryptocurrency by countries such as North Korea and Iran to raise funds and circumvent sanctions [12][14].
