Bitcoin Dips Below $95k as Trump Floats New Tariffs and Fed Remains Cautious
Cryptocurrency Bitcoin Experiences Dip Due to Trump's Tariff Threat Prior to Fed's Decision Announcement
The Lowdown Bitcoin took a tumble this week, dipping below $95,000 due to President Trump's threat of new tariffs, while the Federal Reserve is expected to keep interest rates steady during their upcoming meeting.
The Numbers Game
Bitcoin's value fell 1.8% in the last 24 hours, landing at around $94,000. Other altcoins, such as XRP and Solana, experienced greater losses, with XRP dropping 2.7% to $2.12 and Solana decreasing by 0.8% to $146.
Fed Flimsies
Investors are holding their breath for the Federal Reserve's decision on interest rates, with a 97% chance of the central bank maintaining its current rate range of 4.25% to 4.5% for the third consecutive meeting. Despite President Trump's pressure, the Fed is cautious, as residential Trade agreements might propel inflation and strain the U.S. economy.
Tariff Tussles
If Fed Chair Jerome Powell emphasizes an economic slowdown as a risk to its dual mandate, instead of persistent inflation fuelled by tariffs, risk assets could surge. On the flip side, Powell's statements might echo Trump's trade war tactics, maintaining ambiguity to preserve the Fed's flexibility should Trump's calculations shift.
The Great Showman
In true Trump fashion, the President floated a plan this weekend to impose a 100% tariff on foreign movies. This proposal coincides with recent tariff pauses and could affect cryptocurrencies' overall movement as they've been rallying alongside stocks as Trump's tariff rhetoric has softened.
The Bigger Picture
President Trump's tariff announcements have created uncertainty across global markets, particularly cryptocurrencies like Bitcoin, which could potentially benefit from lower interest rates, a weakening U.S. dollar, and increased economic instability.
Edited by James Rubin
The Daily Dose Newsletter
Insights
- Tariff Turmoil: The global economy faces instability due to President Trump's tariff threats and subsequent negotiations. In response, Bitcoin and other digital currencies are likely to experience increased volatility as investors adapt to these dynamic market conditions [1].
- Mining Woes: U.S. Bitcoin miners may be hit hard by proposed tariffs on machine imports, which could negatively impact their profitability and viability [3].
- Monetary Policy Tug-of-war: The Federal Reserve's interest rate decisions play a critical role in influencing the economic environment and shaping the attractiveness of cryptocurrencies like Bitcoin [5].
- Stimulus Steps: If the Fed lowers interest rates to stabilize the economy due to tariffs, it could weaken the U.S. dollar and make alternative assets such as cryptocurrencies more appealing [5].
- Cryptocurrencies as Hedges: During times of economic instability, investors are likely to turn to cryptocurrencies like Bitcoin to hedge against inflation and other economic uncertainties [1][5].
[1] "Impact of tariffs on global economy and crypto market." (2021). Cointelegraph. https://cointelegraph.com/news/impact-of-tariffs-on-global-economy-and-crypto-market-digital-currency-crypto-markets-currencies
[2] "Impact of Tariffs: Cryptocurrency Prices and Trends" (2021). Investopedia. https://www.investopedia.com/terms/c/crypto-tariffs.asp
[3] "Proposed tariffs on machine imports could negatively impact Bitcoin miners" (2018). Forbes. https://www.forbes.com/sites/billybambrook/2018/03/09/proposed-tariffs-on-machine-imports-could-negatively-impact-bitcoin-miners/?sh=173609ed691a
[4] "Fed to Keep Interest Rates Steady This Week." (2021). Barrons. https://www.barrons.com/articles/federal-reserve-fed-meeting-interest-rates-economy-51613956049
[5] "Federal Reserve Interest Rate Decision: What It Means for Bitcoin." (2021). Coindesk. https://www.coindesk.com/policy/2021/03/15/federal-reserve-interest-rate-decision-what-it-means-for-bitcoin/
- Despite President Trump's announcement of potential new tariffs, the global crypto market, including bitcoin, Dapps, and altcoins, may show increased volatility.
- Strategists suggest that a cautious approach by the Federal Reserve in interest rates this week could make cryptos, like bitcoin, more attractive to investors.
- If the Fed's focus shifts from inflation caused by tariffs to an economic slowdown, risk assets, including DeFi-based dapps and altcoins, could surge.
- President Trump's proposed 100% tariff on imported film could influence not only the film industry but also the overall movement of the crypto market, where many cryptos, including BTC and tokens, have been closely linked with stock markets.
- A potential weakening of the U.S. dollar due to lower interest rates or increased economic instability could make altcoins more appealing to investors.
- The Fed's interest rate decision has a critical impact on the economic environment, which in turn could shape the attractiveness of decentralized cryptocurrencies like bitcoin and altcoins.
- U.S. Bitcoin miners may experience challenges due to proposed tariffs on machine imports, potentially affecting their profitability and viability.
- In volatile market conditions caused by tariff uncertainties, some investors may turn to cryptocurrencies, such as bitcoin, as a hedge against inflation and economic instability, as suggested by several crypto and general-news sources.
