Will the Crypto Market Surge or Decline Following the SCOTUS Tariff Decision?

The crypto market remains stable as traders anticipate a crucial Supreme Court ruling regarding former President Donald Trump's tariffs. Bitcoin's price has bounced back to over $94,000, providing a positive sense in the market following a favorable consumer inflation report. The Supreme Court's decision is poised to significantly influence the trajectory of cryptocurrencies, with potential ramifications for inflation and interest rates.

Key Takeaways

Current Market Situation: Bitcoin's price has risen to $94,426.74, reflecting a 3.3% increase, driven by positive market sentiments.
Supreme Court Ruling: The ruling on Trump's tariffs is expected to take place soon, which could lead to significant changes in market dynamics.
Potential Outcomes: A ruling against the tariffs could bolster the crypto market temporarily, while legal complexities may limit lasting effects.

Will the crypto market rally or crash after the SCOTUS tariff ruling? - 1

Crypto Market Snapshot

The cryptocurrency market remained stable on Tuesday as the U.S. released its consumer inflation report for December, with traders turning their attention to the impending Supreme Court decision regarding President Trump's import tariffs.

Bitcoin's price increased to exceed $94,000, bouncing back from a low of $90,000 earlier this week. Other cryptocurrencies also fared well, with the overall market cap for all digital currencies rising by 3.6% in the past 24 hours to reach $3.3 trillion. The positive CPI report eased concerns about potential rate hikes, enhancing the sentiment for risk assets.

Cryptocurrency Performance Overview

| CRYPTOCURRENCY | 24-HR +/- | PRICE | |-------------------|--------------|-----------| | Bitcoin | +3.3% | $94,426.74 | | Ethereum (ETH) | +3.7% | $3,214.56 | | Solana (SOL) | +3.1% | $144.09 | | XRP (XRP) | +3.9% | $2.13 | | Dogecoin (DOGE) | +5.6% | $0.1445 | | Shiba Inu (SHIB) | +4.7% | $0.058794 |

Supreme Court’s Upcoming Ruling on Trump's Tariffs

A significant moment for the crypto market is on the horizon as the Supreme Court is expected to issue a ruling on Trump's "reciprocal tariffs." This decision is set for Wednesday and revolves around whether the former president's use of emergency powers to impose tariffs on all imports was lawful. The plaintiffs argue that these tariffs effectively function as taxes, which can only be imposed by Congress.

If the Supreme Court determines that the tariffs are illegal, it would not only nullify Trump's primary policy initiative but also obligate the government to refund billions of dollars. Trump commented on this possibility, suggesting it would have detrimental effects on the United States.

Market Reaction Anticipation to the SCOTUS Decision

If the court rules against the tariffs, it could potentially lift cryptocurrencies and other high-risk assets. Such a ruling might signal a quicker decline in inflation as companies lower their prices, consequently increasing the likelihood of the Federal Reserve cutting interest rates sooner than anticipated.

However, there remains a significant risk: the ruling could place the U.S. government in a challenging situation, especially as public debt continues to escalate. Some estimates suggest that Trump's tariffs have aided the government in constraining debt growth by more than $4 trillion within the next decade.

While a crypto market surge could occur if tariffs are eliminated, it is anticipated that the uptick will be short-lived. The former president retains various tools to reimpose tariffs. He could invoke Section 232, citing national security concerns; Section 201, indicating injuries to domestic industries; or Section 301, which addresses issues related to U.S. businesses and rights violations. These actions could result in protracted investigations.

Additionally, Trump could utilize Section 122, which pertains to international payment issues, or Section 338, focusing on discrimination against U.S. commerce.

Thus, the most plausible outcome appears to be a temporary rally in the crypto market should the court render the tariffs illegal, followed by a correction as investors reevaluate their alternatives.