Summary Bitcoin, launched in 2009 as a payment system, pivoted to a reserve asset narrative after the 2018 BTC Cash Fork. A "Trumpcession" may see it finally mature into a reserve. Unlike the 2008 crisis caused by Wall Street and sparking a distrust in the finance system, a Trumpcession stems from political moves, and may cause a global distrust in politics. A potential Trumpcession could trigger a global economic cooldown, leading institutions and nation-states to view Bitcoin as a hedge against political and economic instability. However, risks abound: Bitcoin currently lags gold, correlates to risk assets, and may never mature due to its Trump ties and "failure" as a global currency. While Bitcoin has not yet matured into a global reserve asset and remains correlated with risk assets, its superior technical qualities make it a strong long-term buy, in my view. Despite Trump’s April 9th pivot on tariffs, equity markets are still in turmoil. The S&P 500 declined more than 3% on April 10th. Perhaps more worryingly, yields on 10-year US treasuries are still rising and are above levels seen before April 2nd. A “ Trumpcession ” - which I personally define as a politically induced recession with non-zero risk of inflation remaining sticky - has the potential to plunge the US into a stagflationary environment. Bitcoin ( BTC-USD ) was launched in January 2009, towards the end of the Great Recession. Many observers in the crypto space, me included, believe this was no coincidence. Bitcoin was born as a decentralized payment system as a reaction to a world where Wall Street crashed the US economy due to greed and lax controls. Today’s pos sible “ Trumpcession ” has radically different causes from the 2008 recession. It has not been caused by the greed of Wall Street. Rather, this is the result of a US administration pushing for highly questionable economic policies. However, Bitcoin has also radically evolved in the past 16 years. Launched as a decentralized global payment system, today Bitcoin is more akin to a global reserve asset than as a global currency (more of my thoughts on this shortly). In this article, I explain why exactly like the 2008 Recession saw Bitcoin born as a global alternative to currencies, the “Trumpcession” may be pivotal for Bitcoin , making it mature once as a global reserve asset or become irrelevant for good. How Bitcoin pivoted to become a reserve asset, not a global currency In cryptocurrency, a hard fork is a protocol update to a blockchain that splits it into two new, distinct blockchains. One adheres to the “old rules”, the other adopts new ones to introduce improvements or address existing flaws. Users must decide on which blockchain to stay. Back in 2018, Bitcoin underwent a major hard fork, resulting in Bitcoin Cash ( BCH-USD ) branching off as a new cryptocurrency, distinct from the main Bitcoin blockchain. This 2018 Bitcoin fork was caused by a long-standing argument in the Bitcoin’s community over the core purpose of Bitcoin. Advocates for Bitcoin Cash pushed to raise block size limits, arguing that larger blocks would speed up transactions. They believed this was key to realizing Bitcoin’s original goal as a global currency capable of handling high transaction volumes. With no consensus reached, developers created Bitcoin Cash as a Bitcoin fork. Bitcoin Cash remains the most notable fork in Bitcoin history. This cryptocurrency still exists and ranks among the top 20 cryptocurrencies by market cap. Yet, it pales next to Bitcoin. Today, Bitcoin Cash is valued below $300 per coin, while Bitcoin is priced above $79,000 at the time of writing. I see the Bitcoin Cash fork of 2018 as the moment where Bitcoin definitely pivoted to a narrative of being a new alternative global reserve asset . Many other on-chain indicators point to the same conclusion, for example, the fact that the number of transactions and the number of active addresses on the BTC blockchain has been stagnant since 2018. This is something I covered in detail in a past article on Bitcoin. I encourage readers that still think of Bitcoin as a global payment system to read that piece before proceeding, as this concept is important in the context of my thesis today. Great Recession vs. “Trumpcession”: a macro comparison The Great Recession was provoked by a housing market bubble fueled by risky subprime mortgages, lax lending standards, and complex financial derivatives, leading to widespread defaults and a collapse in global financial markets. In that regard, it was a failure of the financial system, rather than the political one. Unsurprisingly, the “Occupy Wall Street” movement was born as a result of public distrusts in high finance. In contrast, the current situation is the sole result of political will. Of course, we do not know whether the Trumpcession will be deep (or whether it will take place at all). Odds for a US recession are changing rapidly, with different banks placing them at vastly different ranges. Personally, I believe Trump is indeed trying to induce a recession with very questionable policy, and especially tariffs on foreign trade. By pivoting on tariffs just after yields on the 10-Year US Treasuries skyrocketed, I think Trump made it clear his initial policies were a mistake. What the Great Recession and a Trumpcession have in common is that they are both caused by human mistakes which triggered two kinds of public distrusts: Distrust in the contemporary global monetary system - triggered by the 2008 crisis. Distrust in the contemporary political system - something that may be triggered by a “Trumpcession” and an increasingly deglobalized, polarized world. Both elements, in my view, have a strong influence on Bitcoin. In the first case, they were behind the very invention of Bitcoin as a system alternative to traditional finance. In the second case, distrust in politics may be what pushes Bitcoin to mature as a global reserve asset. Or, it may do the exact opposite and condemn Bitcoin to irrelevance. This is what I am going to discuss in my next two sections, with the bull and bear case for Bitcoin in the context of a Trumpcession. The bull case: a Trumpcession and the need for Bitcoin The current US administration was elected with a promise to focus on cutting supposedly ‘unsustainable’ government spend and debt. That was one of the reasons why DOGE was created. DOGE has allegedly saved $150 Billion of taxpayers money to date, according to self-reported accounts that can be found on its own website. Even taking this figure as correct at face value, Trump has effectively negated the full savings amount by raising the Pentagon’s 2025 budget. At a total of $1 Trillion, it represents an increase of slightly more than $150 Billion against the 2024 Pentagon budget of $850 Billion. Brookings Beyond the specifics of each department, US government spending has moved in line with 2024 since the start of this administration, as shown by the chart above. In other terms, there has not been any relevant change in the spending habits of the US government. I find this is potentially very bullish for Bitcoin. Bitcoin has historically been highly correlated with money supply, as shown by the chart below. BTC vs. Global Money Supply (MacroMicro) A Trumpcession may trigger a deep US recession, which in turn may trigger a global cooldown of the economy . Historically, a US recession has often provoked a global recession, due to the size and globalized nature of the world’s economy. This, I believe, can result in one thing only: global banks returning to low rates and relaxed monetary policy , potentially including again Quantitative Easing. Further to this dynamic, there is also the political element that I mentioned previously. If Trump continues with its policies (which I personally see as neo-socialist ), I think the US is going to be seen increasingly as an unreliable trade, economic and military partner. Bitcoin is a neutral asset, which has characteristics technically superior to those of gold - it is far scarcer, significantly easier and cheaper to move, more durable and fungible. In a context of high political uncertainty and increased global money supply, I could see how institutions and nation-states may want to invest in Bitcoin as a further hedge. This may very well be happening together with gold , which has been on a massive bull run recently. Ultimately, in a highly polarized and uncertain world, I see room for both Bitcoin and gold as global reserves. Whether institutions and nation states will start seeing Bitcoin as a reserve, rather than a high-risk asset, remains to be seen. What’s sure, however, is that Bitcoin enjoys far more institutional acceptance today than what it had until the last expansionary monetary cycle . It is far more easily accessible via ETFs and other liquid funds to everyone, and it has generally better acceptance by global regulatory bodies, in my view. The bear case: risks of buying Bitcoin and its recent gold lag To understand the main risk for Bitcoin, one only needs to look at its past: Bitcoin never matured into the original global payment system that its founder, Satoshi Nakamoto, outlined in its Whitepaper . Exactly how that happened, institutions may never start seeing it as a better, digitized version of gold. Personally, I am strongly convinced that humanity will eventually abandon gold as a global reserve asset. That is because gold is not that scarce in nature, at 4 parts per billion in the universe. While that is scarce enough for today, a relatively modest advancement of our civilization (including asteroid mining or new mining techniques) would be enough to render it obsolete almost overnight. However, that may only happen beyond our lifetimes and Bitcoin may not be the beneficiary of such an event. It is exactly a comparison with gold that, in my view, shows how Bitcoin is nowhere near being perceived as a global reserve asset, and it may never get there. GLD vs. BTC vs. QQQ, past 1 year (Seeking Alpha) GLD vs. BTC vs. QQQ, YTD (Seeking Alpha) Bitcoin behaved relatively OK during these challenging times, with some articles on Seeking Alpha even mentioning a supposed “decoupling” of Bitcoin against equities based on a few days' data. However, the reality is that Bitcoin is still highly correlated with risk assets, and it has severely underperformed Gold Year-To-Date as well as in the past year, as shown by the charts above. I find that some Bitcoin skeptics and bulls alike sometimes think of Bitcoin as a sort of immutable protocol that is not subject to human behaviors. I disagree with that notion, and I see Bitcoin as a superior digital protocol that is not immutable at all, but, on the contrary, depends entirely on its community. In this sense, the main risk of investing in Bitcoin today is that its maturity will depend on human behaviors that are difficult or impossible to predict by definition. A final risk - and almost a paradox - is that one of the reasons why institutions and governments may not ultimately decide to adopt Bitcoin is its backing by the Trump administration . In my view, that could act like a deterrent in a context of high diplomatic tension between nation states. Conclusion With the US adopting protectionist economic policies that resemble more those of Venezuela than those of a capitalist country, we are living through unprecedented times. These times may end up benefiting Bitcoin, if the following happens: A Trumpcession may push the US, and the world, into a deep recession. As a reaction, most central banks, with possibly the notable exception of the Fed in case of stagflation, should pivot and resort to lax monetary policy. Bitcoin has historically been correlated to global money supply (as other risk assets) and may benefit enormously from a return to expansive global monetary policy. Pushed by unprecedented levels of uncertainty and distrust in politics (especially American politics), global institutions and governments may start perceiving Bitcoin as a hedge against bad policymaking, and buy it. This may very well happen together with a sustained gold bull run. I see enough room for both Bitcoin and Gold to act as global reserves in today’s polarized world. Of course, the above scenario is all but certain . Bitcoin has not yet matured into a global reserve asset, and is still highly correlated with risk assets such as the Nasdaq 100. The fact that the Trump administration seemingly backs Bitcoin may even act as a further headwind to its adoption by other nation states. Personally, I remain very bullish on Bitcoin , believing that its superior technical qualities will prevail in the long term and make it mature into a global reserve asset. However, significant risks still exist. I rate Bitcoin a STRONG BUY at current price levels, with an upside up to $650,000 per coin, which I discussed in previous coverage of Bitcoin.
