Trump's "reciprocal tariffs" announcement drove the economic trade policy uncertainty index to a record high

President Donald Trump's "reciprocal tariffs" announcement earlier this month drove the economic trade policy uncertainty index to a record high and sent investors away from risk assets

President Donald Trump’s “reciprocal tariffs” announcement earlier this month drove the economic trade policy uncertainty index to a record high and sent investors away from risk assets, which include bitcoin (BTC) and other cryptocurrencies.

However, with the Federal Reserve Chairman Jerome Powell saying that the central bank sees unemployment rising with the economy likely to slow and inflation likely to go up as “some part of those tariffs come to be paid by the public,” brought further pressure on risk assets.

This saw the Nasdaq decrease by 1.17% and the S&P 500 fall by 2.24% ahead of the closing bell.

Despite this, bitcoin rose by over 1% in the past 24 hours, while the CoinDesk 20 (CD20) index, which measures the broader market, added 1.8%, although crypto is seen more as a measure of risk than a safe haven.

According to an analyst at Pepperstone, Michael Brown, demand for “assets which provide shelter from political incoherence and trade uncertainty” is likely to keep increasing, as reported by The Telegraph.

While bitcoin has outperformed the stock market, rising by 1% in the past month compared to the Nasdaq’s nearly 8% drop, institutional investors are flocking to gold, the time-tested safe haven.

The precious metal has increased by 11% over the last month and 27% this year to around $3,340 a troy ounce. Bank of America’s Global Fund Manager Survey indicates that 49% of fund managers view “long gold” as Wall Street’s most crowded trade, with 42% of fund managers predicting it to be the best-performing asset of the year.

UBS analysts wrote in a note that the “case for adding gold allocations has become more compelling than ever in this environment of escalating tariff uncertainty, weaker growth, higher inflation, geopolitical risks & diversification away from US assets & the US$,” reported Investopedia.

Gold fund flows have reached $80 billion so far in 2023, while SoSoValue data reveals that spot bitcoin ETFs saw $5.25 billion in net inflows in January and net outflows since the uncertainty began. Month-to-date, over $900 million left these funds, following February and March, which saw $3.56 billion and $767 billion of net outflows, respectively. Stay informed and updated!

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