It’s not often that the US Federal Reserve quietly admits defeat, but that’s exactly what happened in March when Jerome Powell announced that the Fed would slow its pace of quantitative tightening (QT) and prepare to shift back towards buying treasuries — essentially, a stealth return to quantitative easing (QE).
At first glance it might seem like just another monetary policy tweak. But if you look closer, this is a flashing red sign: fiscal dominance is here, and the Fed is no longer in control.
Now add tariffs to the mix — specifically the aggressive new round announced by US President Donald Trump on “US Liberation Day” — and suddenly we’ve entered a quite different macro environment. For investors in bitcoin and digital assets, this changes everything.
What’s actually going on? Let’s make it simple. The US government is running enormous deficits and has over
$36-trillion in debt. Foreign treasuries buyers such as China are no longer stepping in to fund it.
So who does that leave? Just two players — the Fed and commercial banks (if the rules are relaxed). In other words, the Fed will print money and buy treasuries — or tweak bank regulations so that banks can buy more debt with less capital. That’s how to keep the machine running.
This isn’t some theoretical risk. It’s happening. Powell is being forced to prioritise the government’s funding needs over inflation targets or economic balance. That’s fiscal dominance — and it means we’re in a new regime.
Now enter tariffs
On top of this, the Trump administration is rolling out tariffs on imports from over 50 countries — 10% across the board, with some as high as 50%. The goal? Rebuild domestic industry and “reclaim sovereignty”.
The result will be higher costs for goods, squeezed supply chains and rising inflation. Not the healthy, growth-driven inflation. The bad kind — where prices go up, but nothing improves.
If you’re paying attention, the message is clear: bitcoin isn’t the problem; it’s the signal.
Markets hate this type of uncertainty. And for now so does bitcoin. We’ve seen short-term price drops, not because anything is wrong with the network but because traders treat bitcoin like a high-risk asset — much like tech stocks.
In the short term, bitcoin can be sold off during these moments of fear. But in the long run, it’s built for exactly this kind of environment. Tariffs weaken trust in fiat currencies. The Fed is now clearly backstopping US government debt. And the dollar, while still dominant, is slowly being challenged — both by geopolitical rivals and by market logic.
Bitcoin, with its fixed supply and decentralised structure, starts looking less like a speculative trade and more like a lifeboat. It’s not perfect, but it’s independent, apolitical and scarce — three things fiat can no longer claim.
Crypto mining, volatility and the bigger picture
Will tariffs hurt crypto mining? Yes — imported mining hardware gets more expensive. But that just slows supply growth, which is bullish over time. Will bitcoin remain volatile? Absolutely. But volatility in an asset with strong fundamentals and asymmetric upside is opportunity, not weakness.
The deeper story here is about system fragility. The Fed has been cornered. The treasury is running the show. Tariffs are adding pressure, not relief. And in that kind of environment, scarce, global, non-sovereign assets such as bitcoin gain relevance.
Don’t let short-term price action distract you from what’s really happening. We’re watching the rules of the global economy change in real time — and most investors are still playing by the old ones.
Bitcoin isn’t just a reaction to monetary policy any more. It’s a response to political overreach, trade fragmentation and fiat fatigue. If you’re paying attention, the message is clear: bitcoin isn’t the problem; it’s the signal.
• Muchena is founder of Proudly Associated and author of “Artificial Intelligence Applied” and “Tokenized Trillions”.
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