Recently, discussions have centered on the anticipated outcomes of current economic policies, with a specific focus on inflation and interest rates. The latest COINTURK video highlighted potential bearish trends influenced by Powell’s statements and tariffs.
The Decline in Cryptocurrencies
Former President Trump has been vocal about lowering interest rates, influencing market beliefs. However, apart from two contenders for the Fed Chair, July saw no strong push for rate cuts. 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, which had a 47% probability leading up to it and likely falling further if inflation data remains high. October holds a 70% chance of a rate cut, with a single cut anticipated this December.
Powell acknowledged that despite Trump’s desire for rate cuts, the high U.S. debt affected by interest rates and opposition from two members, any hasty actions could exacerbate inflation. He emphasized avoiding rate hikes unless inflation justifies it, hinting at potential increases if necessary. Upcoming PCE and employment figures could drive significant market changes.
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, affecting major cryptocurrencies negatively.
From August 1, the U.S. will implement elevated tariff rates on several countries, revisiting April levels with potentially higher impacts on inflation. This change will reflect in the August data released in September, observing effects on major economies like the EU.
Additionally, President Trump’s deadline to Putin regarding potential sanctions on oil imports from Russia looms. If no resolution in Ukraine occurs by next Thursday, Trump threatens 100% tariffs on those engaging in trade with Russia, marking unprecedented economic times.
Cryptocurrencies face multifaceted challenges justifying their decline. However, markets could potentially deviate unexpectedly, experiencing false rallies followed by sharp falls or legitimate increases. Current prices see ETH holding at $3,720 and BTC below $116,000, leaving investors cautiously optimistic.
