Tariffs, trade tensions may be positive for Bitcoin adoption in medium term: Grayscale

What to know

• Trade tensions could be positive for bitcoin adoption, Grayscale said.
• Tariffs can lead to stagflation, and this benefits scarce assets such as gold and bitcoin.
• The U.S. dollar's role as the world's single reserve currency may be challenged, allowing room for new reserve assets, the asset manager said.

Tariffs and trade tensions could ultimately be positive for bitcoin (BTC) adoption in the medium term, asset manager Grayscale said in a research report Wednesday.

Higher tariffs result in stagflation— stagnant economic growth coupled with inflation — which is negative for traditional assets, but positive for scarce commodities such as gold, the report said.

Bitcoin is considered hard money, akin to digital gold, and is viewed as a modern store of value, the report noted.

Cryptocurrencies surged on Wednesday following President Donald Trump's announcement of a 90-day pause on tariffs for countries that haven't retaliated against the U.S.

"Trade tensions may put pressure on reserve demand for the U.S. Dollar, opening space for competing assets, including other fiat currencies, gold, and bitcoin," Grayscale said.

Historical precedent suggests that dollar weakness and above-average inflation may persist, and bitcoin is likely to benefit from such a macro backdrop, the asset manager said.

"A rapidly improving market structure, supported by U.S. government policy changes" could help broaden bitcoin's investor base, the report added.