While the market is busy debating the impact of new stablecoin legislation, the renewed tariff threats from Donald Trump are dampening global risk appetite, pushing BTC/USD lower. After a 50% rally from the April lows to record highs in May, Bitcoin was overdue for a correction. And it didn't take long to arrive.

According to Deutsche Bank, stablecoins are a class of assets that promise cheap, 24/7, borderless dollar-based payments, making them attractive for trading and money transfers. Currently, the volume of stablecoins in circulation is around $243 billion, and interest in them is growing rapidly.

Stablecoin market dynamics and structure

One of the key provisions in the bill under consideration by Congress is the requirement that stablecoins be fully backed. Eligible collateral includes insured bank deposits, physical cash, and Treasury bills with maturities of up to 93 days. Some market participants believe the law's passage will boost demand for Treasuries and help the Treasury Department fund the enormous national debt. This is exactly the outcome Treasury Secretary Scott Bessent is hoping for.

The US administration often praises deregulation as a catalyst for economic growth, arguing that lifting restrictions helps businesses thrive. But in the case of cryptocurrency, it is regulation that drives demand and prices. Stablecoin legislation would provide a regulatory framework and set a precedent for future laws on other digital assets, attracting institutional investors to the sector.

This process is already in full swing. For example, the iShares Bitcoin Trust by BlackRock, the largest Bitcoin ETF, recently increased its holdings by $6.35 billion, the largest weekly inflow since the launch of dedicated crypto ETFs.

Capital inflows into iShares Bitcoin trust

Positive changes in the digital asset industry are becoming increasingly visible. However, Bitcoin and similar cryptocurrencies are inherently risky assets, and when global risk appetite declines, BTC/USD comes under pressure.

One might expect that the International Trade Court's ruling against tariffs would be a sigh of relief for US equities and Bitcoin. But in reality, it introduced new uncertainty. Meanwhile, Trump's threat to double tariffs on steel and aluminum imports sends a clearly negative signal for high-yield assets, as does his claim that China is violating the terms of their agreement.

Technical picture

On the daily chart, BTC/USD is forming a 1-2-3 reversal pattern. Short positions initiated on the break below the key level of 106,750 remain valid and may be expanded if BTC breaks below fair value at 103,800.