tl;dr
Bitcoin dances between hope and fear as inflation ticks higher, Trump's tariffs loom, and the Fed's next move sparks chaos. Will crypto survive the storm? Here's the shocking truth.
**Bitcoin Navigates Inflation Data, Tariffs, and Fed Uncertainty**
Bitcoin edged higher on Friday after the Bureau of Labor Statistics reported a 2.7% year-over-year rise in inflation for August, just slightly above July’s 2.6% figure. Core inflation, which excludes volatile food and energy costs, climbed 2.9%, reinforcing the Federal Reserve’s narrative of gradual price-pressure easing. Yet, the data underscored a delicate balancing act for policymakers: managing stubborn inflation while grappling with signs of a cooling labor market.
For investors, the implications are twofold. If inflation continues to decline, risk assets like stocks and Bitcoin could benefit from renewed confidence in the Fed’s impending rate-cutting cycle. However, any unexpected inflation spikes could delay rate cuts, weigh on equities, and strengthen the U.S. dollar.
Bitcoin, however, remains under pressure. The cryptocurrency dipped to $109,000 in the past 24 hours but rebounded slightly to around $109,300. It has fallen 1.5% in the last day and 5.9% over the past week, according to CoinGecko. The market has seen turbulent trading, with over $1 billion in crypto futures contracts liquidated in the past 24 hours. A staggering $852 million of those were long bets, highlighting the risks of leveraged positions in a volatile environment.
A major $19.2 million ETH-USDT contract on Singapore’s HTX exchange was among the largest liquidations, signaling heightened volatility. Analysts point to new U.S. tariffs announced by former President Donald Trump as a potential catalyst. Starting October 1, the policies include a 100% duty on branded drugs, 25% on heavy-duty trucks, and 30% on upholstered furniture. These measures could inject one-off inflationary pressures while dampening economic growth, according to Dean Chen of Bitunix.
“Traders should keep leverage controlled and validate breakouts carefully,” Chen advised, noting that Bitcoin’s key levels to watch are $108,000 as support and $111,000 as resistance.
Meanwhile, Trump’s ongoing criticism of Fed Chair Jerome Powell on Truth Social has added to market noise. The former president accused Powell of hindering inflation reduction, though Powell himself downplayed the long-term impact of tariffs in a recent speech, calling them a “one-time shift in the price level.”
Market expectations for a Fed rate cut in October have softened slightly. The CME FedWatch Tool now gives an 87.7% chance of a 25-basis-point cut, down from 91.9% the prior week. However, user predictions on platforms like Myriad suggest 68% favor a cut, reflecting lingering optimism.
As traders weigh inflation data, tariffs, and Fed signals, Bitcoin’s path remains uncertain. The interplay of these factors—combined with the crypto market’s inherent volatility—demands caution. For now, investors are watching closely, hoping for clarity in a landscape shaped by macroeconomic shifts and geopolitical moves.