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

The crypto market held steady on Tuesday after the U.S. released the December consumer inflation report and as traders focused on the upcoming Supreme Court decision on President Donald Trump’s tariffs.

Bitcoin (BTC) price rose to exceed $94,000, up from this week’s low of $90,000. Other cryptocurrencies were largely in the green, with the market capitalization of all coins rising by 3.6% in the last 24 hours to $3.3 trillion.

Bitcoin has reclaimed the $94,000 level after a positive CPI report eased rate-hike fears, boosting risk-asset sentiment.

SCOTUS to deliver ruling on Trump’s tariffs 

The next major catalyst for the crypto market will be a ruling by the Supreme Court on Trump’s “reciprocal tariffs”, which is expected to come out on Wednesday. 

The court is considering whether Trump’s use of an emergency power to set new tariffs on all imported goods was legal. The plaintiffs also argue that the tariffs are taxes and that only Congress has the authority to impose them.

If the court rules that the tariffs were illegal, it will effectively undo Trump’s flagship policy and leave the government on the hook for billions of dollars in refunds. In a statement on Monday, Trump said that such a move would “screw” the United States.

Crypto market reaction to the SCOTUS decision 

Therefore, a ruling to end tariffs would, in theory, be bullish for cryptocurrencies and other risky assets, as it would increase the likelihood of inflation falling faster as companies reduce prices. Such a move would also raise the odds of the Federal Reserve slashing interest rates faster than expected  

However, the risk is that it would leave the US government in a precarious position as public debt surges. Estimates suggest that Trump’s tariffs would help the government reduce the debt growth by over $4 trillion in a decade.

At the same time, any crypto rally, if the court ends the tariffs, would be brief, as the president still has tools in place to achieve his tariff goal.

First, he can invoke Section 232, citing a threat to national security; Section 201, citing injury to domestic industry; and Section 301, citing discrimination against U.S. businesses or violations of U.S. rights. These options would require lengthy investigation.

Trump can also invoke Section 122, which addresses international payment issues, and Section 338, which addresses discrimination against U.S. commerce.

Therefore, the most likely scenario is a brief crypto market rally if the court rules the tariffs illegal, followed by a pullback as investors assess alternatives.