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What Are Three Threats to the Future of Global Trade and How It Affect Forex and Crypto Markets?
Mar 11, 2025
Ordering a package online can take days or weeks to arrive at your door. It’s a cumbersome process that usually goes unnoticed, but that’s not the case anymore. Supply chain disruptions caused by the COVID-19 pandemic and ongoing trade tensions have made international shipping a significant headache for consumers and businesses.
Today, as we examine the three threats to global trade, it’s vital to understand how these factors impact economic interdependence—and, in turn, you. For example, a trade sanction imposed on a country can drastically affect the forex and crypto markets before a single ship reaches its destination. This guide will illustrate the significance of these looming dangers so you can prepare for what’s ahead. GoMoon's AI-powered economic calendar can help you track trade sanctions and other events that impact global trade. With this tool’s customizable features, you can get the information you need to make informed decisions before the markets react.
Table of Contents
The Role of Global Trade in the Economy
Why Global Trade Is Essential for Economic Growth
Global trade is essential for economic growth. Trade facilitates economic specialization and efficiency, helping countries optimize production and reduce consumer costs. When economies engage in high trade volumes, they create more jobs and attract foreign investment. Finally, more substantial trade flows lead to currency strength and stability.
How Global Trade Affects Forex Markets
Global trade directly impacts foreign exchange markets. First, currency demand rises with high trade volumes. Countries trading in high volumes need their currencies for transactions, increasing demand in forex markets. Next, trade balance impacts exchange rates. Trade surplus countries tend to have stronger currencies, while trade deficit countries tend to have weaker currencies. Finally, trade wars and tariffs cause currency volatility. When countries restrict trade, currencies react violently due to economic uncertainty.
How Global Trade Affects Crypto Markets
Global trade also affects cryptocurrency markets. First, Bitcoin becomes a hedge against trade uncertainty. Economic uncertainty rises when global trade slows down, leading investors to buy Bitcoin as a hedge, and crypto adoption increases in trade-restricted countries. When countries face trade sanctions or banking restrictions, businesses use crypto for cross-border transactions. Finally, stablecoins enable trade in economies with currency instability. Countries with high inflation or weak banking systems use stablecoins like USDT and USDC to facilitate trade.
The Connection Between Global Trade and Financial Stability
A strong global trade system keeps financial markets stable. Forex and stock markets remain stable when international trade is smooth and predictable. Disruptions in trade lead to economic recessions and market instability. When trade flows break down, businesses suffer, and economies contract, leading to currency devaluations.
The Future of Global Trade and Its Impact on Traders
The future of global trade will affect traders and market performance. First, the world is shifting to digital trade and blockchain-based transactions. Crypto and blockchain-based solutions are increasingly being used for global trade settlements. Next, AI and algorithmic trading help traders track global trade movements. AI-powered platforms like GoMoon.ai help forex and crypto traders monitor real-time trade changes and adjust their strategies.
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3 Threats to the Future of Global Trade
Protectionism: The Rise of Economic Nationalism
Protectionism refers to government policies restricting imports and exports to protect local industries. Governments use protectionist policies to reduce reliance on foreign goods and increase domestic production.
Protectionist tools include
Tariffs – Extra taxes on imported goods, making them more expensive.
Quotas – Limits on the number of goods a country can import.
Subsidies – Government payments to local businesses to make them more competitive.
Import bans and restrictions – Completely banning certain foreign goods (e.g., technology, food products).
1. The Impact of Trade Wars on Global Trade
Trade wars occur when countries retaliate against each other’s trade restrictions, reducing global trade volume. An example is the U.S.-China Trade War (2018—present): The U.S. imposed tariffs on Chinese goods (electronics, steel, agricultural products), and China responded with tariffs on U.S. imports (soybeans, cars, tech components). The Result: Higher costs for businesses and consumers. Global supply chains were disrupted as manufacturers relocated production. The Chinese yuan (CNY) weakened, making exports cheaper but hurting global forex markets.
How Protectionism Affects Forex Markets
Currency Devaluation in Protectionist Countries When a country imposes tariffs, its currency often weakens due to reduced trade flow. For example, as exports declined, the Chinese yuan (CNY) weakened during the U.S.-China trade war. Volatility in Commodity Currencies Countries that rely on commodity exports (Australia, Canada, Brazil) see forex instability when trade slows. For example, the Australian dollar (AUD) dropped when China restricted Australian coal imports.
How Protectionism Affects Crypto Markets
Bitcoin as a Hedge Against Trade War Uncertainty During trade tensions, investors move capital into Bitcoin as a hedge against economic instability. Example: In 2019, Bitcoin surged as tensions in the U.S. and China escalated and investors sought an alternative to forex. Increased Use of Crypto for Cross-Border Transactions When tariffs make goods expensive, businesses turn to crypto to bypass banking restrictions.
2. Geopolitical Conflicts and Economic Sanctions: The Risk of Global Trade Fragmentation
The Growing Role of Economic Sanctions in Global Trade Sanctions are restrictions imposed on countries, businesses, or individuals to limit trade and financial access. Governments use sanctions to punish countries for political, military, or economic actions. Example: Russia’s Sanctions After the Ukraine War (2022) The U.S. and EU sanctioned Russian banks, companies, and oligarchs, cutting them off from SWIFT (the global banking network). Russian businesses were forced to find alternative payment methods, including Bitcoin and stablecoins.
How Geopolitical Conflicts Disrupt Global Trade
Wars and political instability reduce trade between countries, forcing companies to shift supply chains. Example: The Russia- Ukraine War’s Effect on Global Trade Energy trade disruption: The U.S. and EU banned Russian oil imports, causing higher oil prices globally. Global wheat shortages: Ukraine and Russia supply 30% of global wheat, leading to food inflation.
How Geopolitical Conflicts & Sanctions Affect Forex Markets
Currency Depreciation in Sanctioned Countries Example: The Russian ruble (RUB) lost 40% of its value after Western sanctions. Safe-Haven Currency Strength Investors buy USD, CHF, and JPY during geopolitical instability, strengthening these currencies.
How Crypto Markets Respond to Geopolitical Uncertainty
Increased Crypto Adoption in Sanctioned Countries Example: After Russia was cut off from SWIFT, crypto trading volume in Russia surged. Governments Tighten Crypto Regulations to Prevent Sanctions Evasion Example: The U.S. Treasury blacklisted Tornado Cash, a privacy mixer allegedly used for sanction evasion.
3. Supply Chain Disruptions and De-Dollarization: The Shift in Global Trade Dynamics
Why Global Supply Chains Are Breaking Down Key Factors Disrupting Supply Chains: The COVID-19 pandemic caused shipping delays and labor shortages. The Russia- Ukraine war disrupted energy and food supply chains. U.S.-China tensions increased restrictions on semiconductor and tech exports.
The De-Dollarization Movement: Countries Moving Away from USD in Trade
What is De-Dollarization? The trend of countries reducing their dependence on the U.S. dollar (USD) for trade and reserves. Led by China, Russia, and BRICS nations (Brazil, India, South Africa, etc.). Examples of De-Dollarization in Action: China and Russia trade in yuan and rubles instead of USD. Saudi Arabia is considering accepting the yuan instead of the USD for oil exports. BRICS nations are developing a new reserve currency to rival the USD.
How Supply Chain Disruptions and De-Dollarization Affect Forex Markets
Supply Chain Shocks Cause Inflation and Currency Weakness. When supply chains break, inflation rises, weakening national currencies. For example, in 2021, semiconductor shortages increased electronics costs, hurting JPY and KRW. A Weakening USD Could Change Global Forex Market Trends. If more countries stop using the USD for trade, the demand for USD will decline. For example, countries buying oil in yuan instead of USD could reduce the strength of the USD in the forex market.
How Crypto Markets Are Affected by Supply Chain and De-Dollarization Trends
Bitcoin Adoption in Countries Moving Away from USD If countries reduce their reliance on the USD, they may adopt Bitcoin as a global reserve asset. For example, El Salvador adopted Bitcoin as legal tender to reduce its dependence on the USD. Stablecoins (USDT, USDC) Compete with Fiat Currencies in Global Trade As the USD loses influence, stablecoins may emerge as the preferred cross-border payment method.
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How These Threats Impact the Forex and Crypto Markets
Currency Devaluation in Protectionist Economies
When a country imposes tariffs or trade restrictions, its currency tends to weaken due to reduced foreign investment. Global investors pull out due to uncertainty. Lower export demand also plays a role. Fewer exports mean lower demand for the country’s currency. One example is the Chinese Yuan (CNY) during the U.S.-China trade war from 2018 to 2019. The U.S. imposed tariffs on Chinese goods, reducing China’s exports. In response, investors sold Chinese yuan (CNY) and moved funds into USD. The result was a significant yuan devaluation, with USD/CNY rising from 6.2 to 7.1.
Increased Volatility in Commodity-Linked Currencies
Countries that rely on commodity exports (oil, metals, agriculture) experience currency instability when trade slows. For instance, Australia is a significant iron ore exporter to China. During the U.S.-China tensions, China reduced Australian imports, causing the Australian dollar (AUD) to decline sharply. Traders who shorted AUD/USD before the trade restriction made profits.
Flight to Safe-Haven Currencies in Times of Trade Wars
During trade uncertainty, investors sell risky currencies and move into safe-haven currencies. One example is the Japanese Yen (JPY), which strengthened amid global trade uncertainty. 2019 JPY surged against the USD and EUR as traders hedged against global trade risks. USD/JPY dropped from 112 to 104, showing investor confidence in the yen’s stability.
Sanctions Cause Sharp Currency Devaluations
Countries facing sanctions experience capital flight, loss of foreign reserves, and reduced trade, leading to currency depreciation. A recent example is the Russian ruble (RUB), which collapsed after sanctions in 2022. The U.S. and EU banned Russian banks from SWIFT, reducing RUB liquidity. RUB/USD initially collapsed from 75 to 140 before the Russian Central Bank intervened.
USD Strengthens as a Global Safe Haven During Sanctions
When sanctions destabilize economies, the U.S. dollar (USD) increases. For instance, as Russia faced sanctions, investors moved into USD, causing the U.S. Dollar Index (DXY) to rise by 15% in 2022. Forex traders who longed USD against weaker currencies (RUB, TRY, ZAR) profited.
Sanctions Disrupt Trade Routes and Increase Volatility in Emerging Market Currencies
Countries that trade with sanctioned nations face currency instability due to disrupted supply chains. Take the Turkish lira (TRY) and Iranian sanctions, for example. Turkey traded heavily with Iran, but U.S. sanctions limited transactions. As a result, the Turkish lira (TRY) depreciated, leading to high inflation.
Bitcoin and Stablecoins Gain Adoption in Sanctioned Countries
Businesses turn to crypto for transactions when sanctioned countries are cut off from SWIFT and forex liquidity. One example is Russia’s increased crypto use after the SWIFT ban in 2022. After being removed from SWIFT, Russian businesses turned to Bitcoin and USDT to facilitate trade. Crypto trading volume in Russia surged by 300% in early 2022.
Crypto Becomes a Hedge Against Inflation and Trade Uncertainty
When trade wars or sanctions cause currency collapses, investors move into Bitcoin (BTC) as an inflation hedge. Venezuela’s crypto boom amid U.S. sanctions is a good example. The Venezuelan bolívar (VES) collapsed due to inflation after U.S. sanctions. Citizens turned to Bitcoin and USDT to store wealth and trade internationally. As a result, Venezuela became one of the countries with the highest crypto adoption ranking in 2021.
Crypto Regulations Tighten to Prevent Sanction Evasion
Governments respond by cracking down on exchanges and privacy-focused crypto tools. The U.S. Treasury’s ban on Tornado Cash in 2022 is a clear illustration. The U.S. sanctioned Tornado Cash, a crypto mixing service, claiming it was used for sanction evasion. Traders with Tornado Cash-linked wallets were banned from U.S. exchanges.
Countries Moving Away from USD in Global Trade
Some countries are reducing their reliance on the USD for trade, shifting to local currencies or alternative payment methods. Take China's and Russia’s yuan-based trade deals, for example. China and Russia have settled oil and gas payments in yuan (CNY) instead of USD. If USD demand declines, DXY could weaken, impacting forex markets.
How De-Dollarization Could Increase Bitcoin’s Role in Global Trade
Bitcoin could become a neutral global reserve asset if the USD's dominance declines. El Salvador’s adoption of Bitcoin for international trade offers a clear example. El Salvador legalized Bitcoin for payments to reduce reliance on USD. If more countries follow, BTC’s role in global trade will increase.
The Shift to Stablecoins as an Alternative to USD in Trade
As USD-based trade weakens, USDT, USDC, and decentralized stablecoins like DAI could become more popular for global transactions. Businesses in Argentina and Turkey use stablecoins to hedge against currency inflation. GoMoon transforms economic calendar data with AI-powered insights for smarter trading decisions. Our platform analyzes global events and rates their market impact on a scale of 1-10, helping you understand how they'll affect various assets.
How to Trade Against These Global Trade Threats
Stay Alert: Why Tracking Economic Events Is Crucial for Traders
Forex and crypto markets react instantly to trade policy changes, tariffs, and sanctions. Traders who receive real-time updates can adjust their positions before markets react.
Key Events and Indicators to Watch
Central Bank Announcements & Interest Rate Decisions Example: Federal Reserve, ECB, PBoC, and BOJ interest rate policies affect trade and forex trends.
Tariff Changes & Trade War Announcements Example: The U.S.-China trade war caused massive forex swings in USD/CNY.
Sanctions and Geopolitical Conflicts Example: In 2022, the Russian ruble (RUB) collapsed due to U.S. and EU sanctions.
Supply Chain Data & Export/Import Reports Example: China’s COVID lockdowns disrupted supply chains, weakening AUD, NZD, and JPY.
Using AI-Powered Tools Like GoMoon.ai to Track Market Events
GoMoon.ai analyzes global trade policies and assigns impact scores to key events. Traders can receive alerts on new tariffs, sanctions, and currency fluctuations. Example: If GoMoon.ai predicts a trade restriction on Chinese tech exports, traders can short CNY/USD before markets react.
Hedging Strategies to Protect Against Currency Volatility
Hedging in Forex Markets
Safe-Haven Currencies & Risk-Off Trades During trade uncertainty, traders hedge by buying safe-haven currencies like USD, JPY, and CHF.
Example: Safe-Haven Rally During the U.S.-China Trade War (2018-2019) As trade tensions increased, investors moved into JPY and CHF, strengthening these currencies. USD/JPY fell from 112 to 104 as demand for JPY surged.
Forex Hedging Strategies: Go Long on Safe-Haven Currencies. Buy USD/JPY, USD/CHF, or EUR/CHF during geopolitical uncertainty.
Short Weakening Currencies in Trade-Restricted Countries: When sanctions reduce trade flows, short CNY/USD, RUB/USD, or TRY/USD.
Use Forex Options & Futures to Manage Risk Example: Traders bought EUR/USD options during Brexit trade uncertainty to hedge against euro volatility.
Hedging in Crypto Markets
Bitcoin & Stablecoin Strategies Bitcoin and stablecoins act as hedges when fiat currencies weaken due to trade disruptions.
Crypto Hedging Strategies: Buy Bitcoin (BTC) During Trade Disruptions.
Example: BTC surged in 2019 as U.S.-China tensions worsened. D diversifying Stablecoin Holdings Traders uses USDT, USDC, and DAI across multiple blockchains to avoid restrictions.
Use Decentralized Finance (DeFi) to Avoid Centralized Exchange Risks.
If centralized exchanges block traders from sanctioned countries, use DEXs like Uniswap or Curve.
Monitor Bitcoin Adoption in Sanctioned Countries. For example, Russia’s crypto volume increased 300% after SWIFT restrictions.
Diversifying Forex and Crypto Holdings to Reduce Trade-Related Risks
Why Diversification is Key During Trade Wars and Sanctions
Overexposure to a single currency or asset increases risk when trade policies change. Holding multiple forex pairs, commodities, and crypto assets reduces risk.
Diversification Strategies for Forex Traders Hold a Mix of Major and Emerging Market Currencies
Example: If U.S. trade tensions weaken the USD, traders can hold EUR, JPY, and CHF.
Trade Commodity Currencies When Sanctions Impact Oil & Metals
Example: When Russian oil was sanctioned, the CAD (Canadian dollar) gained value as an oil-exporting country.
Avoid Holding Currencies of Politically Unstable Nations
Example: The Turkish lira (TRY) and Venezuelan bolívar (VES) have been highly volatile due to sanctions.
Diversification Strategies for Crypto Traders: Use Multiple Stablecoins to Avoid USD Risks
Example: If the U.S. regulates USDT, traders can shift to USDC, BUSD, or decentralized stablecoins.
Hold Bitcoin as a Hedge Against Fiat Currency Weakness
Example: BTC outperformed traditional markets during the U.S.-China trade war.
Monitor De-Dollarization Trends for Crypto Growth
Example: If BRICS nations reduce their dependence on USD, Bitcoin adoption could increase.
Using AI-Powered Market Intelligence to Stay Ahead of Disruptions
Why AI is Essential for Tracking Global Trade Trends
AI can analyze real-time global trade, forex, and crypto data. It helps traders predict market reactions before they happen.
How GoMoon.ai Helps
Traders Adapt to Global Trade Threats Real-Time Alerts on Trade Policy Changes Example: If the U.S. imposes new tariffs on China, GoMoon.ai notifies traders to adjust their positions.
AI-Powered Risk Analysis for Forex & Crypto Markets Example: GoMoon.ai assigns impact scores to sanctions, tariffs, and supply chain news.
Predictive Market Signals for Trade-Driven Volatility Example: If GoMoon.ai detects rising Bitcoin adoption in a sanctioned country, traders can long BTC before prices spike.
GoMoon Uses AI To Decode Economic Events For Smarter Trading
GoMoon transforms economic calendar data with AI-powered insights for smarter trading decisions. Our platform analyzes global events and rates their market impact on a scale of 1 to 10, helping you understand how they'll affect various assets. We've packed everything traders need: live economic event streaming, custom notifications, and historical event replay with TradingView charts. What sets us apart is our comprehensive approach to event analysis.
Whether you're tracking the impact of major economic announcements or comparing forecast data with actual outcomes, GoMoon provides straightforward, actionable insights. You can personalize your calendar, stream live meetings directly on the platform, and analyze historical events like the dot-com bubble or the COVID-19 crash to understand market reactions better. GoMoon clarifies the complex world of economic events for traders seeking data-driven decisions. Get started for free to get AI-powered economic insights today.
Use Our AI-powered Economic Calendar Tool for Free Today
Global trade is changing fast, especially since the COVID-19 pandemic. Economic interdependence can make countries more vulnerable to external shocks. For example, as countries close borders to contain the spread of the virus, it disrupts global supply chains and trade. Countries that depend on trade for economic growth may suffer severe financial consequences. They may turn to protectionist policies that further inhibit global trade. Moreover, as countries recover from the pandemic, they may prioritize domestic production over trade to build resilience against future shocks. As international trade loses its appeal, countries may face economic recession. These threats to global trade can destabilize economies and hurt ordinary people who rely on trade for their livelihoods.
GoMoon Uses AI To Decode Economic Events For Smarter Trading
GoMoon transforms economic calendar data with AI-powered insights for smarter trading decisions. Our platform analyzes global events and rates their market impact on a scale of 1 to 10, helping you understand how they'll affect various assets. We've packed everything traders need: live economic event streaming, custom notifications, and historical event replay with TradingView charts. What sets us apart is our comprehensive approach to event analysis.
Whether you're tracking the impact of major economic announcements or comparing forecast data with actual outcomes, GoMoon provides straightforward, actionable insights. You can personalize your calendar, stream live meetings directly on the platform, and analyze historical events like the dot-com bubble or the COVID-19 crash to understand market reactions better. GoMoon clarifies the complex world of economic events for traders seeking data-driven decisions. Get started for free to get AI-powered economic insights today.
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