Bitcoin has performed well in the first half of 2025. A bullish attitude has grown due to renewed interest from institutions, higher spot ETF volumes, and increased use in emerging markets. However, even with all this hope, analysts say that a geopolitical curveball may be on the way that could test the strength of Bitcoin bulls. The new threat? A growing tsunami of tariff threats is unfolding worldwide, particularly over the next two months.
This essay provides an in-depth analysis of how trade tensions, particularly threats of tariffs from major countries such as the United States and China, may destabilise Bitcoin markets. Some analysts argue that the current macroeconomic environment, which is favourable for crypto, may shift quickly and become a negative trap.
Bitcoin’s Evolving Role in Global Markets
Bitcoin is no longer a small, independent digital asset. Bitcoin has become a measure of global risk sentiment since major banks, including BlackRock, Fidelity, and Grayscale, have become involved. As events unfold in the world, including trade wars, sanctions, and supply chain issues, digital assets are increasingly behaving like traditional risk-on assets.
Over the past decade, Bitcoin’s relationship with broader economic factors, including the US Dollar Index (DXY), Treasury rates, and global stock markets, has become increasingly strong. Bitcoin’s safe-haven narrative is being revisited due to rising trade tensions, particularly between the U.S. and China.
Tariff Tensions and Bitcoin Volatility
A new era of “tariff ultimatums” is on the horizon, says on-chain expert and macro strategist Lucas Moretti. These are strict trade deadlines or policy threats that major economies impose, especially when elections are approaching or the economy is slowing down. In 2025, both the U.S. and China will face political pressure to protect their businesses. That’s prompting people to discuss protectionism more and reigniting debates about tariffs, particularly in areas such as green energy, semiconductors, and technology.
Moretti says that the next 60 days are significant. Many trade agreements need to be renegotiated, and if diplomacy fails, tariffs are likely to go up. In the past, markets have reacted to situations like these with increased volatility, and Bitcoin, now part of the larger financial system, is unlikely to be immune.
Bitcoin’s Shifting Role in Geopolitical Crises
For a long time, many have argued that Bitcoin is a reliable means of protecting oneself from inflation and political instability. However, evidence suggests that when significant geopolitical crises occur, such as the Russia-Ukraine conflict or the U.S.-China trade conflicts, Bitcoin’s behaviour is more similar to that of risk assets, like tech stocks, than to gold.
This changing link makes Bitcoin less appealing as a hedge amid certain sorts of geopolitical stress. The main threat of tariff ultimatums isn’t direct crypto regulation, but the economic impact they have on other things. If tariffs are implemented, global commerce may decline, GDP growth could slow, and unemployment rates could rise. These factors are all detrimental to liquidity and make investors less willing to take risks.
ETF Demand Under Threat
The rise in demand for U.S. spot Bitcoin ETFs has been one of the key things that have helped Bitcoin in 2025. Ark Invest, BlackRock, and VanEck are examples of issuers that have helped institutions adopt BTC by providing them with compliant, custodial access to it. However, if the economy is unstable, these flows may cease.
When things are uncertain, investors typically sell their volatile holdings. Bitcoin ETFs are no different. Historical data from Glassnode and IntoTheBlock show that BTC exchange-traded products suffer significant losses when the market declines. If trade tensions worsen, demand for ETFs may slow, which would be a substantial blow to the bull market.
Mining Pressure Grows
When the global economy is unstable, it can be challenging to access cash. To combat secondary inflation caused by tariffs, central banks can either hold off on lowering rates or even raise them. This atmosphere is inherently unsuitable for speculative investments.
Bitcoin miners, who are already under pressure because of the 2024 halving, may have to sell additional BTC to stay in business. If energy prices rise due to supply chain issues, this could put even more pressure on the sell side.
Similar trends have been observed in the past, including during the 2018 U.S.-China tariff conflict. Not only did regulation produce significant changes in the crypto markets, but macroeconomic hardship also affected Bitcoin’s liquidity structure.
Bitcoin: Long-Term Gains, Short-Term Risks
In the long run, not everything is bad. Most macro analysts still believe that Bitcoin will appreciate over the long term. They point to the forthcoming U.S. elections, increased digital currency use, and the global trend of de-dollarisation. However, over the next two months, the “tariff ultimatums” trap could pose a significant challenge for bulls with excessive debt and traders who are overly enthusiastic.
Lucas Moretti places a strong emphasis on the mental aspect. In 2021 and 2022, the same kind of confidence led to excessive borrowing and excessive buying. If today’s investors don’t consider macroeconomic risk, the subsequent correction may occur quickly and be substantial. Derivatives and leveraged trading on Binance, Bybit, and BitMEX increase the risk of liquidation.
Balanced Investing and Key Market Signals
Investors should exercise caution and maintain a well-balanced investment portfolio. While dollar-cost averaging (DCA) can reduce timing risks, it’s important not to overexpose in an unpredictable market. It’s just as crucial to keep an eye on macroeconomic indicators, such as U.S. Treasury rates, CPI statistics, and geopolitical events, as it is to follow the BTC chart. Stablecoin flows, notably USDT and USDC on-chain movements, might reveal mood swings early. Whales and institutions may be risk-averse if money moves into secure assets or off-exchange wallets.
