Discussions regarding the impact of economic policy on the cryptocurrency market have intensified amid rising inflation and unstable interest rates. Focus has shifted to potential bearish trends influenced by Fed Chair Jerome Powell's statements.
Decline in Cryptocurrency Prices
Former President Donald Trump has been vocal about lowering interest rates, influencing market beliefs. However, in July, there was no strong push for rate cuts apart from two contenders for the Fed Chair. Members Waller and Bowman favored reductions, but a majority of the 11 Fed members would need to support such a decision.
Powell expressed concerns regarding economic stability, quoting inflationary pressures from tariffs and rejecting immediate rate reductions. This stance has diminished investor expectations for a cut at the next Fed meeting.
Market Expectations for Cryptocurrencies
Upcoming economic data releases this week could drastically influence trading patterns, with potential for increased selling pressure if indicators like PCE are unfavorable.
Starting from August 1, the U.S. will implement elevated tariff rates on several countries, which could impact inflation. This change will reflect in the August data released in September, affecting major economies like the EU.
Future of Economic Policy
Additionally, President Trump has issued a deadline to Putin regarding potential sanctions on oil imports from Russia. If no resolution in Ukraine occurs by next Thursday, Trump threatens 100% tariffs on those engaging in trade with Russia.
In this context, cryptocurrencies face multifaceted challenges justifying their decline. Current prices show ETH holding at $3,720 and BTC below $116,000, leaving investors cautiously optimistic.
The cryptocurrency market remains under pressure from economic policy. Expected changes could lead to unpredictable fluctuations, and market participants should consider current macroeconomic factors.
