Bitcoin Will Be The Big Winner Of The Trade War

As the trade war between the United States and China threatens the global balance, Bitcoin is gradually emerging as the next international reserve currency.

Trade War and Stock Market Chaos

The United States and China are hitting back and forth in this trade war that began in 2018 when Donald Trump imposed tariffs on $250 billion worth of Chinese goods. Beijing then retaliated with tariffs on $110 billion worth of American goods.

The Biden administration will maintain most of the tariffs while negotiating a rebalancing of trade exchanges. However, despite numerous agreements, China has not fulfilled all its commitments for additional purchases of American products.

Tensions resumed in 2023 with the ban on exporting advanced semiconductor manufacturing machines. The Middle Kingdom retaliated through restrictions on the export of rare metals like gallium and germanium, essential to the high-tech industry.

Trade tensions have reached a new level with tariffs now reaching 125%. In other words, trade exchanges between the two economic giants are on the verge of completely ceasing.

To put things in perspective, let’s remember that China exported $439 billion to the United States in 2024. This represents 13% of total Chinese exports and 16% of American imports.

Hence the 19% drop of the S&P 500. Bitcoin has returned to $82,000, a decrease of about 24% from the record high of $109,225 reached on January 20, 2025.

Painful, some might say, but it is nothing compared to 2018, when BTC had fallen by 77% in response to the market turmoil caused by the Covid psychosis (-77%…). It seems that we have entered a new era, and monumental crashes now belong to the past.

Finally, let’s note that the 10-year US rate (the North Star of US Treasury Secretary Scott Bessent) remains very high (4.2%) while the primary goal of government policy is to lower it.

The End of the Empire

Americans could live beyond their means as long as the rest of the world was willing to finance their debt. This is the famous petrodollar system whereby exporting nations place their trade surpluses in U.S. Treasury bonds.

This monetary hegemony allows them to borrow cheaply and import far more than they export (a trade deficit of $1.1 trillion per year) without collapsing their currency. But ultimately, nothing is really free! The flip side is a gargantuan debt. Uncle Sam owes nearly $8 trillion to the rest of the world…

Everything was fine as long as the empire could force the entire world to finance its Ponzi debt, but all good things come to an end. And when BRICS say they no longer want to trade in dollars, it must be understood that they no longer wish to finance the American way of life.

Message received at the White House, where they have thus decided to address the “twin deficits”. The budget deficit (DOGE) and the trade deficit (tariffs). The bet being that reducing spending, appreciating the dollar, and reindustrializing will at least partially offset the inflation of import prices.

It feels like we are reliving the Gorbachev era with the dissolution of the American empire as the climax. And like in the USSR, the return to reality will not be painless; Donald Trump does not hide this. The good news is that this weight loss regimen keeps us away from a third world war.

Unsurprisingly, the Chinese central bank has just ordered banks to reduce their purchases of US Treasury bonds. The United States is ready to trade again on an equal footing, and that is to be welcomed. This was indeed the original goal of the gold standard before the betrayal of 1971…

Bitcoin, the Bretton Woods 2.0

The runaway debt cannot last forever, and it is commendable that the United States realizes this. Very well, it will now be necessary to repay this $8 trillion debt…

Indeed, not repaying the $800 billion that the United States owes to China would likely not resolve the annexation of Taiwan and its TSMC (Taiwan Semiconductor Manufacturing Company) factories…

That is why Donald Trump is closely interested in Bitcoin. The United States is well positioned to know that Bitcoin is tailored to become an international reserve currency. The CIO of Bitwise, Matt Hougan, said the same this Tuesday on Bloomberg:

What stands out most clearly from all this tariff chaos is that we should expect to move from a world where the dollar is the only reserve currency to a world where multiple reserve currencies coexist, which will benefit Bitcoin.

Matt Hougan, CIO of Bitwise, April 8, 2025

Accumulating several million bitcoins before anyone else would allow the U.S. government to generate a significant capital gain to offset this $8 trillion debt. Such is the bold strategy of the American president, and many ideas are on the table to achieve this. Selling gold or even issuing bitbonds.

In this regard, it is very encouraging to see that Vladimir Putin is also interested in Bitcoin, being the originator of the BRICS revolt against the dollar. By allowing the United States to act first, the world could settle its differences peacefully.

This is to say that Bitcoin is well on its way to becoming the next international reserve currency. In this regard, don’t miss our article: The key argument in favor of Bitcoin.