3 Reasons Bitcoin May Outperform XRP and Ethereum Next Year

When it comes to electronic money, there is one name that stands out: Bitcoin (CRYPTO: BTC). The original electronic money accounted for about 63% of the total market capitalization of the crypto market. However, Bitcoin is too big to always yield the best profits. Recently, XRP (CRYPTO: XRP) has received a lot of attention as regulatory pressure on the company has eased and its utility has been significantly boosted by some advancements from Ripple. Meanwhile, Ether (CRYPTO: ETH) is often considered the backbone of DeFi, with its smart contract blockchain handling most of the heavy lifting in the industry. Although there are reasons to argue that both are superior to Bitcoin, I believe Bitcoin will ultimately excel in the current context. Here are three reasons why investors should consider the king of Electronic Money.

1. The flight to quality President Donald Trump has quickly and decisively applied broad tariffs on almost everything imported into the United States since taking office in January. He not only announced potential large tariffs on imports but also suspended them, stating that he would create exceptions and continue to apply some tariffs. All of these lead to great instability in the market. It is hard to know what to do with your money if the playing field could change completely tomorrow. When the market is uncertain, they will sell off riskier assets. That is certainly true for the entire crypto market, and Bitcoin is no exception. However, among all the types of electronic money that investors can buy, Bitcoin is the highest quality investment. It has significant support from institutions and many major stakeholders, and the U.S. government currently holds Bitcoin as part of its strategic crypto reserves. Investors selling risky altcoins are likely to transfer their funds into Bitcoin. Therefore, it is not surprising that Bitcoin has held up better than XRP or Ethereum in the past few months. I hope that continues as long as the macroeconomic environment remains unstable.
2. Investors withdraw money from the US market Since Trump's announcement of the tax, we have seen both US stocks and debt decrease in value. This is not the usual way. Remember, investors typically move from risky assets (stocks) to safer assets (Treasury bonds). However, the decline in Treasury bonds indicates that investors are completely abandoning the US market rather than moving from risky assets to safer ones. Those investors will be looking for a safe asset to buy. Foreign debt may be one option; gold is another, but Bitcoin is also an interesting case. This is especially true due to the second-order effect from the mass migration away from U.S. securities. The U.S. dollar has weakened significantly over the past few weeks. The US dollar index has fallen more than 10% since Trump took office in January. The dollar weakened significantly after tariffs were announced on April 2 and did not recover after Trump announced a suspension of those tariff levels. When the US dollar weakens, it often leads to higher Bitcoin prices.
3. Inflation can drive prices higher. Bitcoin is considered a hedge against inflation. Most economists agree that tariffs will cause inflation. That makes sense. An escalating trade war with tariffs on all imported goods, from manufacturing equipment to parts to final products, will have a significant impact on the final prices of goods. Combine that with a weakening US dollar, and we will see considerable inflationary pressure. Because Bitcoin has a fixed supply, theoretically, one dollar could buy less, which would also apply to Bitcoin. This means that the price of Bitcoin will increase. However, the economy of Bitcoin does not exist in a vacuum. The three factors mentioned here, all of which are consequences of Trump's tariffs, indicate that Bitcoin performs relatively well compared to other cryptocurrencies and other assets in general. The more unstable the macroeconomic environment becomes and the longer the trade war drags on, the more we will see money flowing into Bitcoin compared to other cryptocurrencies. Therefore, investors may find that Bitcoin's dominance in the market will continue for even longer in the coming months.