Bernstein: It is not surprising that tariffs lead to cryptocurrency sell-offs; sovereign nations will hoard gold and Bitcoin as an economic buffer
ChainCatcher news, according to The Block, analysts at brokerage firm Bernstein stated in a report to clients: "If tariffs mean a stronger dollar, rising inflation, and a weakened prospect of interest rate cuts in the short term, then this implies a decline in global liquidity for risk assets. Over a longer time frame, as governments take on higher debt and larger deficits, leading to further currency devaluation, Bitcoin has relative value against the dollar, which is evident in Bitcoin's long-term compounded history. However, in the short term, Bitcoin is correlated with risk assets. Therefore, the sell-off in cryptocurrencies is not surprising."Bernstein analysts believe that in the long run, the Trump administration sees cryptocurrencies as strategically significant for government governance and national finances, aiming to control inflation through deficit reduction, cost-cutting measures led by Elon Musk's efficiency department, and increased energy production. While foreign governments may retaliate against tariffs by selling U.S. Treasury bonds, Bernstein expects sovereign nations to hoard gold and Bitcoin as an economic buffer, with the U.S. leading the shift in support for cryptocurrencies, and more countries likely to follow suit.