Can Cryptocurrency Become a New Safe Haven Choice During Economic Recession?
Author: Andrew Urquhart
Translated by: Baihua Blockchain
President Donald Trump announced earlier this week a 10% tariff on the UK and a 49% tariff on Cambodia, stating that these tariffs would raise trillions of dollars for the U.S. economy and "make America rich again." In the past day, articles have flooded in discussing whether these tariffs will lead to an economic recession, their impact on the U.S. economy, and how China might respond.
Given the market uncertainty and the significant losses across all financial markets within a day of the announcement, does this present an opportunity for cryptocurrency?
01 Cryptocurrency as a Safe Haven Asset
Cryptocurrency was initially viewed as a safe haven and hedging tool against traditional financial assets, but it has recently proven to be a poor safe haven asset, serving only as a weak hedge during financial market downturns. As a result, the correlation between cryptocurrencies and stocks and bonds has been increasing.
In light of the tariff news and the economic uncertainty it brings, investors may seek refuge in Bitcoin (and other cryptocurrencies) as they have in the past during times of high market uncertainty. Grayscale's research director Zach Pandl noted: "I believe the tariffs will undermine the dollar's dominance and create space for competitors, including Bitcoin. Prices have fallen in the short term. However, the first few months of the Trump administration strengthened my long-term confidence in Bitcoin as a global monetary asset."
Bitcoin has deflationary characteristics, predictable supply, and is often labeled as "digital gold," leading investors to view it (and other cryptocurrencies) as a safe way to hold wealth during periods of extreme economic and political uncertainty.
02 Market Activity
In recent months, many cryptocurrency companies have been seeking to go public. U.S. stablecoin issuer Circle (which issues USDC) submitted an S-1 form to the Securities and Exchange Commission (SEC) on Tuesday, planning to list under the ticker "CRCL."
USDC Stablecoin Issuer Circle Files for IPO
Circle Internet Group, the company behind the popular USDC stablecoin, has filed an S-1 form with the SEC in preparation for an initial public offering. The company plans to issue shares on the New York Stock Exchange under the ticker "CRCL," the filing shows. JPMorgan will serve as the lead left bookrunner for the proposed offering, while Citigroup will act as the lead right bookrunner, according to a statement on Tuesday. Bookrunners act as underwriters when IPOs or new financial products are issued by banks and other institutions…
The company reported that its stablecoin business reserves generated $1.7 billion in revenue by the end of 2024. Additionally, Ripple, Kraken, and Gemini are also rumored to be considering IPOs, indicating that many in the industry believe now is the time to go public, issue shares, and further integrate into the traditional financial system.
Moreover, the price trends over the past year have been positive. When Donald Trump was re-elected as U.S. president in November, Bitcoin initially surged to a historic high of over $75,000, later peaking above $109,000 in January. However, in recent months, Bitcoin's price has retreated and is currently hovering around $80,000.
Institutional investors continue to be attracted to cryptocurrency, especially since the launch of Bitcoin spot ETFs in January 2024. According to a survey by Ernst and Young at the beginning of 2025, 89% of institutional investors plan to increase their exposure to digital assets in 2025, with 59% allocating more than 5% of their portfolios to digital assets. This is a significant proportion, with 68% of respondents stating they would buy immediately once a regulated ETF for Solana or XRP is listed.
Additionally, according to DefiLama, the stablecoin market continues to grow, with a total size exceeding $230 billion. Therefore, the cryptocurrency market shows no signs of slowing down, and activity remains robust.
Regulatory Clarity
Since cryptocurrency became mainstream in 2008, there has been a lack of regulatory clarity. During the previous administration, including then-SEC Chairman Gary Gensler, there were enforcement actions regulating cryptocurrency, such as high-profile cases involving Coinbase and Ripple Labs.
Gensler took about 100 enforcement actions against cryptocurrency during his nearly four-year tenure as SEC chairman. However, many in the industry believe that regulating through enforcement is ineffective, and the SEC needs to provide more guidance and a sound regulatory framework in collaboration with the cryptocurrency industry.
Cautious Attitude in Washington
Crypto legislation could free the industry from SEC oversight—but critics warn this is a Pandora's box
As crypto-related bills rapidly advance in Congress with the goal of passing before August, the potential impacts of this legislation are just beginning to become clear. For example, one of the bills seeks to amend U.S. securities laws to formally exclude most crypto assets from the definition of "securities"—a bold move that has almost no precedent in congressional history, at least since these laws were established during the New Deal in the 1930s…
The "Financial Innovation and Technology Act of the 21st Century" (FIT), passed in May 2024, provided some clarity to the market, although it went against SEC Chairman Gensler's wishes. Trump stated during his 2024 campaign that if elected, he would "fire SEC Chairman Gary Gensler on the first day." Although Trump did not fulfill this promise, Gensler resigned in January 2025 after seeing the writing on the wall.
Since then, the SEC's attitude towards cryptocurrency has become quite positive, with SEC Commissioner Hester Peirce publicly supporting the market and establishing a crypto task force dedicated to integrating the industry into the market. Regulatory clarity has long been seen as the biggest obstacle to widespread adoption of cryptocurrency, and with clarity potentially on the horizon, this can only be good news for the market.
03 Strategic Bitcoin Reserves
One of the most interesting, and perhaps least likely, events during the early Trump administration was the announcement of a strategic Bitcoin reserve. On March 2, Trump announced that the reserve would include Bitcoin, Solana, Cardano, Ripple, and Ethereum, aiming to make the U.S. the "world's crypto capital" and support industry growth.
An executive order signed on March 6 officially established this reserve, funded by Bitcoin and non-Bitcoin digital assets seized by the Treasury. While the U.S. government currently has no plans to purchase more digital assets to fund this reserve, the fact that the government is using it as a reserve can only be seen as a positive signal for the market.
U.S. May Sell Gold to Establish Bitcoin Reserves: Standard Chartered Bank
Standard Chartered analyst Geoff Kendrick suggested that the U.S. government could purchase Bitcoin through several budget-neutral methods while executing President Donald Trump's latest executive order to establish a strategic Bitcoin reserve…
However, as with any market, predicting the movements of the cryptocurrency market is futile. As Isaac Newton said, you can "calculate the movements of celestial bodies, but you cannot calculate the madness of men."
Pandl believes that Bitcoin will reach new historical highs this year, and given the activity in the cryptocurrency ecosystem and the uncertainty in finance and politics, the coming year will undoubtedly be full of highlights for cryptocurrency.
Article link: https://www.hellobtc.com/kp/du/04/5739.html
Source: https://s.c1ns.cn/5Cojt
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