Crypto prices have collapsed as President Donald Trump’s trade war has expanded. Across the board, crypto prices are down for the year, and many show little sign of recovery anytime soon.

Against a backdrop of escalating tariffs, investors are moving from risky assets to less risky assets, and that makes any cryptocurrency an easy candidate to drop from a portfolio. But there’s one cryptocurrency that could still win, and that’s Bitcoin (BTC -0.19%).

Bitcoin as digital gold

During the past 30 days, Bitcoin is up 14%, primarily due to the revival of the digital gold investment thesis. In the eyes of many investors, Bitcoin is starting to behave just like physical gold, and that makes it extraordinarily valuable. During times of economic and geopolitical uncertainty, Bitcoin could be a potential store of value.

While there is still skepticism about this digital gold thesis, there is also a growing body of evidence to suggest that Bitcoin holds up even better than gold during moments of peak economic and geopolitical uncertainty.

Last September, BlackRock issued a 10-page report, titled as “Bitcoin As a Unique Diversifier,” that examined six different external shocks to the world economy that occurred between 2020 and 2024, including the COVID-19 pandemic and Russia’s invasion of Ukraine.

In five of six cases, Bitcoin performed better than gold over the long haul. And in half of the cases, Bitcoin performed better than gold over both the short term and long term. So that gives me a lot of confidence that Bitcoin can still be a winner, even if the trade war escalates further. As investors come to grips with the consequences of tariffs, they are likely to turn to Bitcoin as a store of value. That could explain why Bitcoin has started to rally during the past 30 days.

Institutional adoption

The second major factor is a ramp-up in institutional adoption of Bitcoin during the past 18 months, thanks primarily to the launch of spot Bitcoin exchange-traded funds (ETFs) last year. They have now hauled in more than $100 billion from investors looking for an easy way to get exposure to Bitcoin.

Arguably, these Bitcoin ETFs, which started trading back in January 2024, were the most successful new product launch from Wall Street in decades. And they are attracting all sorts of investors. First were the hedge funds. Then came the big Wall Street investment banks. And then came the first wave of big institutional investors, such as pension funds. Next up could be big sovereign wealth funds.

At the same time, another form of institutional adoption is coming from within the U.S. government. Trump campaigned on a pro-crypto platform, and has already taken several steps to advance Bitcoin adoption within the U.S. The centerpiece move was the creation of the Strategic Bitcoin Reserve back in March, which officially designates Bitcoin as a national strategic asset.

Bitcoin as a new reserve currency?

The current uncertainty around tariffs has a lot of smart people on Wall Street talking about the potential demise of the U.S. dollar as the reserve currency of the world. The dollar is now trading at three-year lows, U.S. equities are down sharply, and long-term Treasury yields are on the rise. Combined, this starts to paint a picture that investors are getting out of dollar-denominated assets.

The fancy term for this is “de-dollarization,” and it refers to a world in which the U.S. dollar eventually loses its reserve currency status. With that in mind, one currency that is now being talked about as a potential replacement for the U.S. dollar is Bitcoin. It’s global, it’s non-sovereign, and it is not tied to the specific economic fortunes of any country.

Admittedly, this scenario is likely a long way off, but it hints at the long-term staying power of Bitcoin and its growing importance to the global financial system. It also suggests that, even in a worst-case meltdown of the global economy, Bitcoin might still be a winner.

Bitcoin as a portfolio diversification tool

As BlackRock pointed out last year in its report, Bitcoin has a very unique risk-reward profile. In some ways, it acts as a “risk on” asset. And in other ways, it acts as a “risk off” asset.

Right now, given all the economic uncertainty, I’m less focused on Bitcoin’s “risk on” properties, and more focused on its “risk off” properties. The trade war might have crushed crypto, but it won’t be able to crush Bitcoin.