If Trump increases tariffs on China, the side effects on the crypto and forex markets could be significant.

*Crypto Market:*

- *Increased Volatility*: Higher tariffs could lead to market instability, affecting investor sentiment and causing crypto prices to fluctuate wildly. For instance, when Trump announced a 20% tariff on China, Bitcoin dropped by 2.5% and Ethereum by 3.1%.

- *Risk-Off Sentiment*: Traders might become risk-averse, leading to a decline in crypto investments and a potential sell-off. This could result in a decrease in active Bitcoin addresses and trading volumes.

- *Decentralized Assets as a Hedge*: Some investors might view decentralized assets like Bitcoin as a hedge against fiat currency fluctuations and market uncertainty.

*Forex Market:*

- *Market Fluctuations*: The S&P 500 and NASDAQ have shown significant fluctuations in response to trade tensions, with the S&P 500 dropping by 3.45% and NASDAQ by 3.71% recently.

- *USD Strength*: The US dollar might strengthen against other currencies due to Trump's tariffs, potentially affecting forex trading and global trade dynamics.

- *Global Economic Impact*: Higher tariffs could lead to increased inflation, reduced economic growth, and employment concerns, ultimately affecting forex markets.¹ ² ³

*Potential Scenarios:*

- *Tariff Relief*: If Trump decides to reduce tariffs, it could boost the Chinese economy and increase demand for cryptocurrencies, as seen in the 2.5% increase in Bitcoin's price against the Chinese yuan (CNY) after Trump's announcement.

- *Escalating Trade War*: If the trade war escalates, it could lead to a long-term recession, stock market volatility, and slowed trade, ultimately affecting both crypto and forex markets.⁴ ⁵