Can a tariff dividend create a new liquidity cycle for Bitcoin in 2025?

Yes - but only in sentiment, not in substance. Analysts suggest that President Donald Trump’s proposed $2,000 “tariff dividend” has fuelled a wave of market optimism rather than a genuine injection of liquidity.

The announcement triggered a short-lived crypto rebound, lifting Bitcoin back above $104,000, as traders drew parallels with the 2020 pandemic payments that helped fuel the last major bull run. Yet with limited fiscal backing and political obstacles, many believe this rally may be driven more by sentiment than by substance.

Key takeaways

• Trump’s $2,000 “tariff dividend” prompted a brief rally in Bitcoin and Ethereum, despite serious doubts over its feasibility.
  
• Funding gap: The proposed payout would cost around $300 billion, but tariff revenues generate only about $90 billion net.
  
• Institutional demand remains strong, with $2.7 billion in ETF inflows and BlackRock’s IBIT managing close to $100 billion in BTC.
  
• The Federal Reserve’s 25-basis-point rate cut and improved risk appetite continue to support Bitcoin above the $100K mark.
  
• Analysts see two paths: A climb towards $120K–$125K if optimism holds, or a slide below $100K once political enthusiasm fades.
  
• Crypto’s sensitivity to liquidity narratives underscores how sentiment - not policy - often leads market direction.

Trump’s tariff dividend promise and the market reaction

In a Truth Social post, President Trump claimed that the United States was generating “trillions of dollars” from tariffs and could use those funds to both reduce its $38 trillion national debt and finance a “dividend” for most Americans, excluding high earners.

The statement triggered a modest crypto rally as traders priced in the possibility of more household liquidity.

Markets quickly drew comparisons to the pandemic-era stimulus cheques that helped spark a historic bull market. Traders, long conditioned to respond to any hint of fresh money supply, reacted instinctively - even though the policy remains more political talking point than fiscal plan.

Why the maths don’t add up

Despite the excitement, the numbers simply do not work. Fiscal experts note that Trump cannot unilaterally authorise such payments; they require Congressional approval and a new funding bill.

The funding shortfall is also substantial:

• A $2,000 payment for 150 million adults would cost around $300 billion.
  
• Tariff collections to date total $120 billion, and after factoring in slower economic growth and lower tax receipts, net revenue sits closer to $90 billion.
  

As Erica York, Vice President of Federal Tax Policy, explained: “Each dollar raised through tariffs offsets about 24 cents in income and payroll tax revenue.” In short, the government lacks both the legal authority and the financial headroom to execute this plan, making any near-term payout highly unlikely.

Stimulus Déjà Vu: Why markets still care

The crypto rally reflects not fiscal reality but liquidity psychology. Even without concrete policy action, the mere suggestion of a “dividend” rekindles traders’ belief in free-flowing money and renewed risk-taking.

This mirrors 2020, when stimulus payments coincided with a surge in Bitcoin and altcoins as retail investors redirected government cheques into digital assets. 

Although the scale is smaller this time, the pattern remains: crypto markets respond instantly to liquidity cues - whether real or imagined.

Bitcoin ETF inflows and structural strength

Beyond political headlines, Bitcoin’s structural outlook remains solid. Institutional inflows into U.S. spot Bitcoin ETFs exceeded $2.7 billion in early November, led by BlackRock’s IBIT and Fidelity’s FBTC. IBIT alone now holds $80.47 billion, cementing its position as the fastest-growing ETF in U.S. history.

Macroeconomic conditions are also supportive:

• The Federal Reserve’s 25-basis-point rate cut has lifted risk appetite.
  
• Trump’s pardon of Binance founder Changpeng Zhao signalled a more conciliatory stance towards crypto.
  
• Thailand and Malaysia are exploring the inclusion of Bitcoin in national reserves, marking a step towards mainstream adoption.
  

These developments indicate that even if Trump’s “dividend” proves politically untenable, the underlying liquidity narrative remains alive.

Market impact and price scenarios

If bullish sentiment and ETF inflows persist, Bitcoin could extend towards $120,000, driven by institutional accumulation and looser policy. However, should enthusiasm fade, a pullback below $100,000 remains a possibility as traders reassess the fundamentals.

So far, Bitcoin’s stability above $100,000 reflects confidence from institutional investors - although analysts warn that the rally is driven more by belief than by financial logic.

Bitcoin technical insights

Bitcoin’s price action shows early signs of recovery after holding above the key $101,500 support level, where sellers appear to have exhausted their momentum. This level remains crucial - a decisive break below could trigger further liquidations. On the upside, $110,500 serves as the first major resistance, followed by $116,000 and $125,000, where profit-taking is likely to intensify.

The Bollinger Bands are beginning to narrow after a period of strong volatility, suggesting potential consolidation before the next breakout. The price is also attempting to climb back toward the middle band (the 10-day moving average), signalling an improving short-term outlook.

Meanwhile, the RSI (14) has risen sharply to around 60, pointing to strengthening bullish momentum without yet entering overbought territory. If RSI continues upward past 60–70, it would confirm a shift in market sentiment toward renewed buying pressure.

Investment implications

For traders, sentiment remains the main short-term driver. Bitcoin’s $100K level represents the critical dividing line between bullish conviction and renewed caution.

Those trading crypto through Deriv MT5 can access advanced charting tools and cross-market analysis, making it easier to track correlations between Bitcoin, gold, and the U.S. dollar - especially during policy-driven volatility.

Meanwhile, traders can use the Deriv Trading Calculator to estimate potential profits, required margin, and swap rates before entering a position, ensuring tighter risk control in fast-moving conditions.

• Short term: Tactical buying opportunities exist above $102K–$104K if ETF inflows remain robust.
  
• Medium-term: Expect volatility tied to political announcements and monetary policy signals.
  

Long-term: Institutional accumulation and steady global adoption continue to underpin a structurally bullish outlook, even if near-term hype cools.