The economic world is in turmoil, with a blend of events potentially redefining the global landscape. From geopolitical tensions to conflicting signals from the Federal Reserve and the rise of cryptocurrencies, investors are grappling with a volatile mix of factors reshaping the rules of the game.
Trump Returns to the White House: Tariffs and Geopolitical Tensions
President-elect Donald Trump is ready to rattle markets with new trade tariffs. He has threatened a 25% levy on Mexico and Canada, along with an additional 10% on Chinese imports, claiming these measures are necessary to protect the U.S. economy and combat the influx of illegal drugs such as fentanyl.
However, China has not stayed silent. Liu Pengyu, spokesperson for the Chinese embassy in Washington, warned that “no one wins a trade war.” UBS analysts believe Asia, thanks to a more resilient supply chain and opportunities in emerging sectors like artificial intelligence and green technology, is better positioned to weather this new wave of protectionism than during the 2018-2019 trade war.
Federal Reserve: Monetary Policy on a Precarious Balance
With the change in White House leadership, the Federal Reserve is under scrutiny. According to Paolo Zanghieri, Senior Economist at Generali Investments, the U.S. central bank faces a delicate task: normalizing monetary policy without undermining economic growth.
Zanghieri anticipates another 25-basis-point rate cut by December, with additional easing throughout 2025, bringing rates down to a range of 3.5% to 3.75%. However, he warns that markets could react with volatility, as expectations about the fiscal impact of Trump’s policies might push yields higher, tightening financial conditions.
Bitcoin: The Era of Corporate Crypto Revolution
Amid growing geopolitical tensions, cryptocurrencies are gaining traction as a safe haven for companies and investors. Rumble, an emerging video platform, has announced plans to purchase up to $20 million worth of Bitcoin, highlighting the increasing institutional adoption of the cryptocurrency.
Chris Pavlovski, CEO of Rumble, stated that Bitcoin serves as a “valid hedge against inflation” and a strategic asset for the company. This move follows the lead of MicroStrategy, which achieved a stunning 600% growth in 2024 thanks to its Bitcoin accumulation strategy.
However, it’s not all smooth sailing for cryptocurrencies: Bitcoin’s price dropped by 5.4%, sliding below $93,000, following Trump’s tariff threats. Despite the volatility, many analysts predict continued growth in crypto adoption, particularly under a U.S. administration seemingly favorable to the sector.
What to Expect in 2025?
With the U.S. economy projected to grow by 2% in the fourth quarter and the first half of 2025, according to Zanghieri, the global outlook remains uncertain. Markets are caught between promises of robust growth and threats of trade tensions, while the Federal Reserve walks a fine line between managing inflation and supporting growth.
In this context, Bitcoin and other cryptocurrencies are emerging as increasingly strategic tools for businesses and investors navigating the challenges of global economic uncertainty.