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Investors now have the US deficit to worry about, as if tariffs weren't enough.
But for cryptos, the dollar's slump towards the lowest since December 2023 is actually a boost.
Of course, short-term volatility bit into Bitcoin trading at life highs near $111,000. This was specifically from Trump's social media posts, whacking a clear bullish trend or narrative for the OG crypto token.
Trump's trade war has smacked broader global markets, a widely seen trend this year. However, crypto trading has been mixed. In the short term, they have fallen in tandem with stocks on risk-off bets and surged in line with gold on safe-haven bets.
Still, a longer view indicates increasing crypto bets as investors are forced to choose between a skyrocketing asset in Bitcoin and looking for more compensation to keep their money for longer in the so-called safe US Treasuries.
Barring the fall on Friday in US Treasuries on a safe-haven bet from Trump's 50% tariffs threat on Europe, which at the moment seems more of a negotiating tactic, longer-dated US Treasury yields surged above 5% to the highest since 2007, a year before the financial crisis began.
Bond markets have rejected Trump's economic broadsides, including his beautiful tax bill weighing heavily on the dollar.
Bond traders have echoed Moody's concerns on surging US debt and servicing costs, which are expected to hit $1 trillion this year, up from $263 billion in 2017.
The 'sell American assets' is not helping the dollar or Treasuries either. The money has to move somewhere for investors looking for returns and beyond record-setting gold.
So, those looking for alternative assets have put that money into cryptos, with institutional investors betting big on Bitcoin.
Why are bond markets shuddering on America's fiscal mess?
A downgrade by Moody's Investors Service on May 16 marked a significant turning point for the world's largest economy. It indicated that the US government had lost its sole triple-A credit rating from a prominent international ratings agency.
The current national debt in the United States is approximately $36 trillion, which translates to approximately $106,100 for each individual in the nation.
Republicans in Congress are pushing through Trump's proposed tax and spending plan, which opponents argue will increase the national debt by trillions of dollars over the next decade, making an already dire situation even worse.
Both Fitch Ratings and S&P Global Ratings have downgraded the US since 2011.
As a percentage of GDP, debt interest expenses have been steadily rising since inflation swept away the period of historically low rates.
So, the bond markets hating Trump's beautiful tax bill is not surprising.
Investors remember that the 1990s bond market demand for far higher yields was the only thing that convinced policymakers to reduce the deficit. They reason that there really is no check on US politicians right now, and thus, it could be worthwhile to repeat the event.
The narrative seems to be a boost for cryptos, as the asset class is the least likely to be impacted, similar to tariffs.
However, the digital assets industry is more concerned about how the high debt and inflation from tariffs impact the Federal Reserve's monetary policy path.
The bigger impact and the spillover are likely to be on traditional assets.
Still, the crypto market will be volatile in the short run, with Trump's whims and fancies playing a different tune almost every other day.
Bitcoin, which had surged to a new life high this week of above $110,000, was last changing hands at around $109,500.
The debate before Trump's announcement on Friday was how high Bitcoin would surge.
For now, though, the longer view of a bull run in Bitcoin is still intact, with the path of least resistance tilted more broadly to the upside for cryptos.
