Saifedean Ammous: Trump vs. the Bond Market, the Bond Market Wins

Source: Cointelegraph Original: "Saifedean Ammous: Trump vs. the Bond Market, Bond Market Wins"

Analysts criticize the impact of U.S. President Donald Trump's import tariffs on finance, with some believing that this development highlights Bitcoin's unique economic attributes during times of global uncertainty.

Critics say that Trump's 90-day suspension of higher reciprocal tariffs, which restores tariffs on most countries other than China to a 10% baseline, exposes the vulnerability of the U.S. bond market.

"The Bitcoin Standard" ( The Bitcoin Standard ) economist and author Saifedean Ammous stated that Trump's decision to cancel higher tariffs may be a response to rising bond yields, indicating that the government is compelled to take action.

"Trump fought against the bond market, and the bond market won," Ammous said in an X post on April 23. "On the first day, this strategy seemed to work, as the significant drop in the stock market was seen as a small price to pay for fiscal sustainability."

"But then the bond market began to collapse, and people started to realize how disastrous tariffs were, and how wrong it was to expect that a deliberate stock market crash would boost the bond market," he added.

Source: Saifedean Ammous

After the tariff measures, government bond yields surged.

After Trump announced tariffs, CNBC data showed that the 10-year Treasury yield soared from below 4% to 4.5% amid a sell-off triggered by inflation and recession fears.

10-year bond yield, 1-year chart Source: CNBC

"The rise in yields is completely contrary to what the government wants, reversing direction half a day after the tariffs take effect, which is devastating for Trump's negotiating position," Ammous said.

Some analysts, including Raoul Pal, the founder of "Global Macro Investor", indicate that tariff manipulation may just be a "gesture" in the trade agreement between the United States and China.

"Looking back now, all the talk about China yielding under Trump's threat sounds ridiculous, especially since Trump couldn't maintain his tariffs for even two days," Ammous said, adding that China had "absolutely no intention" of reaching out to strike a deal.

According to Nansen analysts, the delay in reaching a trade agreement may limit the recovery of the stock and cryptocurrency markets, depending on the outcome of the trade negotiations.

At the same time, Bitcoin's performance "is not like tech stocks, but more like a hedge against economic uncertainty," Nexo analyst Illya Kalchev told Cointelegraph after Trump stated that he would "significantly reduce tariffs on Chinese goods."

The trade war has reignited the demand for the Bitcoin standard.

This situation has reignited the long-standing proposal to back the US dollar with Bitcoin.

Ammous stated that the United States should continue to buy Bitcoin until the government holds enough Bitcoin to fully support the dollar supply, ultimately transitioning to a Bitcoin standard:

"Continue to buy Bitcoin until the value of the Bitcoin held by the U.S. government is enough to support the entire dollar supply, then adopt the Bitcoin standard, where dollars can be exchanged for Bitcoin, and the government will never spend more than its income." Historically, the dollar was backed by gold and could be exchanged for a fixed amount of precious metals before 1933, when President Franklin D. Roosevelt suspended gold convertibility in response to the Great Depression.

In 1971, President Richard Nixon suspended the dollar's convertibility into gold, aiming to protect the United States' gold reserves and stabilize the economy, marking the beginning of the fiat currency system that still exists today.

The fixed supply of Bitcoin is hard-coded in its tokenomics, making it a popular digital competitor to gold.

Joe Burnett, the market research director of Unchained, predicts that Bitcoin may match or exceed the market value of gold within the next decade, estimating that the price of Bitcoin will exceed $1.8 million by 2035.

Related articles: Bitcoin (BTC) may replicate the rise of gold; if it maintains its current strong momentum, the price is expected to break through the $150,000 barrier.