Donald Trump’s mass tariffs continue to send shockwaves across the global markets, including the crypto market. Interestingly, a similar development with tariffs has occurred twice in the past, and history suggests that they could have far-reaching consequences, even more than what financial experts predict.
What Happened The Last Time Similar Events Like Donald Trump’s Tariffs Occurred
In an X post, market commentator Stacy revealed that events similar to Donald Trump’s tariffs have occurred twice in American history before now. The first is said to have been in 1828, and the second was in 1930, with Trump’s tariffs making the third. She noted that the last two caused a depression, which represented a period of massive global economic downturn.
Market experts have already predicted that Donald Trump’s mass tariffs could have massive impacts on the market, starting with the US economy. Goldman Sachs has upped their odds of a recession to 35%. Meanwhile, odds on prediction market Polymarket show there is a huge chance of a recession occurring this year, a development which is bearish for the crypto market.
The market is already negatively reacting to Donald Trump’s mass tariffs. Bitcoin dropped from as high as $88,000 to around $81,000 on the back of Trump’s announcement, while altcoins are entering bear market territory. It is also worth mentioning that the stock market suffered a $2.85 trillion loss yesterday, its worst record in four years.
Developments in the stock market are significant, as Bitcoin is known to share a strong positive correlation with stocks. If the stock market continues to slide, Bitcoin could be at risk of a further crash. These price crashes undoubtedly provide insights into how the global economy could suffer a massive downturn, like the last two times similar events like Donald Trump’s tariffs occurred.
The Fed Could Step In
Crypto analyst Mikybull Crypto has predicted that the US Federal Reserve will likely step in following Donald Trump’s mass tariffs. He believes they will cut interest rates and introduce a stealth kind of quantitative easing (QE), especially with the rising odds of a recession this year. Such a move from the Fed could relieve the market and ease the current market uncertainty.
Before now, the US Central Bank has been adamant about easing monetary policies, with Fed Chair Jerome Powell stating that Donald Trump’s tariffs could cause inflation to rise. However, the US economy is looking more likely to enter into a recession than witness a rising inflation, which is why Powell and the FOMC may be forced to step in.
Interestingly, Trump has urged the Fed to cut interest rates on several occasions, with some arguing that tariffs are one of the ways he is looking to force their hands. An interest rate cut is bullish for the crypto market as it could inject more liquidity into crypto assets and lead to another bull run.
At the time of writing, the Bitcoin price is trading at around $82,600, down over 1% in the last 24 hours, according to data from CoinMarketCap.
Featured image from Unsplash, chart from Tradingview.com
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