Trade Wars and Market Volatility: A Stress Test for Crypto Assets

Cryptocurrency markets are undergoing a period of extreme volatility, contrasting sharply with gold's steady outperformance. The resurgence of trade war rhetoric—particularly former President Trump's threat of 100% tariffs on Chinese goods—has injected uncertainty into global markets. Such a move WOULD elevate the average U.S. tariff rate to 31%, potentially derailing the Federal Reserve's cautious approach to rate cuts.

Market sentiment mirrors the unease of past economic downturns, with regional bank fears resurfacing and private credit markets unnerving investors. Equities and oil are retreating, while crypto assets swing wildly. Gold's resilience stands out as traders increasingly price in aggressive Fed easing.

The looming Trump-Xi meeting could become a flashpoint. Historical patterns suggest markets would react poorly to escalated tariffs—a scenario that may force digital assets to prove their merit as uncorrelated hedges during geopolitical storms.