HEATH MUCHENA: Trump, trade and crypto: why bitcoin will trigger a global financial reset
15 January 2025 - 05:00
byHeath Muchena
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The global financial landscape is on the brink of enormous change and as always crypto is in the eye of the storm. With Donald Trump reclaiming the presidency, we’re not just looking at a political shift — we’re staring down a potential reset of the global monetary system.
For investors, the question isn’t whether to buckle up but how to position portfolios to thrive amid uncertainty. Spoiler alert: bitcoin and crypto could become the ultimate beneficiaries of this tectonic economic transformation.
Trump’s policy goals are clear: bring manufacturing back to America, fortify military power and reindustrialise the economy. But these lofty ambitions come with a heavy price tag and require one key ingredient — money. Lots of it.
How does Trump plan to make America competitive again? By weakening the dollar. Devaluing the greenback against gold or other major currencies makes US exports cheaper and incentivises companies to move production back home. It’s a bold strategy, but it’s also a double-edged sword that could send ripple effects through global markets.
A weaker dollar means inflationary pressure on other nations. To counter this, countries such as China, Japan and those in the EU are likely to print more money, further expanding global liquidity. Historically, when fiat currencies flood the market scarce assets like gold — and increasingly bitcoin — become the go-to hedge.
Faced with Trump’s trade policies, China is likely to respond by printing yuan to stabilise its slowing economy and counteract deflation. However, a weaker yuan could lead to capital flight as wealthy Chinese investors seek safer havens. Bitcoin and other cryptocurrencies stand to benefit as digital lifeboats for escaping capital restrictions.
Japan’s economic relationship with the US means it will follow Trump’s directives to strengthen the yen, making Japanese products more expensive but politically aligning with America. To offset the pain, Japan may inject trillions of dollars into global markets as it unwinds its carry trade, injecting much-needed liquidity into risk assets such as crypto.
Europe’s response is less about action and more about survival. As EU leaders face economic stagnation and inflation they are turning to financial repression — essentially forcing European savers to fund state projects by restricting investment options. This is likely to drive European investors towards decentralised assets such as bitcoin, where their capital can’t be seized or inflated away.
Why crypto could shine bright
In a world flooded with fiat, bitcoin’s fixed supply becomes its most attractive feature. Unlike gold, which is tied to physical logistics and geopolitics, bitcoin is borderless, easily transferable and increasingly recognised as “digital gold”.
Here’s why the next wave of macroeconomic shifts could catapult crypto:
Dollar devaluation. If Trump devalues the dollar, assets like bitcoin, which is priced in dollars, will naturally rise as its purchasing power increases.
Institutional inflows. Speculation about governments or institutions holding bitcoin as a reserve asset — similar to gold — will drive demand higher.
Global liquidity flood. With central banks printing money to maintain economic stability, surplus fiat will flow into scarce digital assets, amplifying crypto’s bull run.
Crypto’s path to glory isn’t without obstacles. A few bumps on the road could include:
Regulatory clamps. Governments might tighten regulations on crypto to curb capital flight or protect their fiat systems.
Market timing missteps. Investors betting on short-term price movements could get caught in bouts of volatility, especially around Trump’s inauguration next week.
Overreliance on liquidity. If central banks mismanage liquidity injections it could lead to deflationary shocks, hurting all risk assets, including crypto.
How investors can prepare
Navigating the intersection of macroeconomics and crypto requires a mix of patience and strategy. Investors should consider:
“Hold on for dear life” mentality. Long-term crypto holders tend to outperform those trying to time the market. Bitcoin’s scarcity and growing adoption remain its most compelling long-term value drivers.
Diversification. Alt-coins in emerging narratives such as decentralised finance (DeFi) and science (DeSci) could offer outsize returns as liquidity spills over into speculative assets.
Buying the dip. Expect volatility, especially around major political milestones such as Trump’s inauguration. Savvy investors should use these moments to accumulate.
The world is shifting. Fiat currencies are set to lose purchasing power as central banks scramble to maintain control in the face of rising debt, trade imbalances and political demands. For bitcoin, this is a golden — or digital — opportunity.
While we’re unlikely to see a smooth ride to $120,000 or beyond, the macroeconomic winds are clearly blowing in crypto’s favour. As Trump’s policies push the world towards a new monetary system, bitcoin is emerging not just as a hedge but as a cornerstone of the financial future.
For investors willing to stomach the volatility the rewards of riding this wave could be nothing short of transformational.
• Muchena is founder of Proudly Associated and author of ‘Artificial Intelligence Applied’ and ‘Tokenized Trillions’.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
HEATH MUCHENA: Trump, trade and crypto: why bitcoin will trigger a global financial reset
The global financial landscape is on the brink of enormous change and as always crypto is in the eye of the storm. With Donald Trump reclaiming the presidency, we’re not just looking at a political shift — we’re staring down a potential reset of the global monetary system.
For investors, the question isn’t whether to buckle up but how to position portfolios to thrive amid uncertainty. Spoiler alert: bitcoin and crypto could become the ultimate beneficiaries of this tectonic economic transformation.
Trump’s policy goals are clear: bring manufacturing back to America, fortify military power and reindustrialise the economy. But these lofty ambitions come with a heavy price tag and require one key ingredient — money. Lots of it.
How does Trump plan to make America competitive again? By weakening the dollar. Devaluing the greenback against gold or other major currencies makes US exports cheaper and incentivises companies to move production back home. It’s a bold strategy, but it’s also a double-edged sword that could send ripple effects through global markets.
A weaker dollar means inflationary pressure on other nations. To counter this, countries such as China, Japan and those in the EU are likely to print more money, further expanding global liquidity. Historically, when fiat currencies flood the market scarce assets like gold — and increasingly bitcoin — become the go-to hedge.
Faced with Trump’s trade policies, China is likely to respond by printing yuan to stabilise its slowing economy and counteract deflation. However, a weaker yuan could lead to capital flight as wealthy Chinese investors seek safer havens. Bitcoin and other cryptocurrencies stand to benefit as digital lifeboats for escaping capital restrictions.
Japan’s economic relationship with the US means it will follow Trump’s directives to strengthen the yen, making Japanese products more expensive but politically aligning with America. To offset the pain, Japan may inject trillions of dollars into global markets as it unwinds its carry trade, injecting much-needed liquidity into risk assets such as crypto.
Europe’s response is less about action and more about survival. As EU leaders face economic stagnation and inflation they are turning to financial repression — essentially forcing European savers to fund state projects by restricting investment options. This is likely to drive European investors towards decentralised assets such as bitcoin, where their capital can’t be seized or inflated away.
Why crypto could shine bright
In a world flooded with fiat, bitcoin’s fixed supply becomes its most attractive feature. Unlike gold, which is tied to physical logistics and geopolitics, bitcoin is borderless, easily transferable and increasingly recognised as “digital gold”.
Here’s why the next wave of macroeconomic shifts could catapult crypto:
Crypto’s path to glory isn’t without obstacles. A few bumps on the road could include:
How investors can prepare
Navigating the intersection of macroeconomics and crypto requires a mix of patience and strategy. Investors should consider:
The world is shifting. Fiat currencies are set to lose purchasing power as central banks scramble to maintain control in the face of rising debt, trade imbalances and political demands. For bitcoin, this is a golden — or digital — opportunity.
While we’re unlikely to see a smooth ride to $120,000 or beyond, the macroeconomic winds are clearly blowing in crypto’s favour. As Trump’s policies push the world towards a new monetary system, bitcoin is emerging not just as a hedge but as a cornerstone of the financial future.
For investors willing to stomach the volatility the rewards of riding this wave could be nothing short of transformational.
• Muchena is founder of Proudly Associated and author of ‘Artificial Intelligence Applied’ and ‘Tokenized Trillions’.
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