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The arrival of Trump’s administration was seen as a promising time for cryptocurrency, offering relief from disruptive sanctions. However, this positive development has been overshadowed over the past four months due to Trump’s tariffs, leading to significant losses for investors. With this backdrop, questions arise: How are negotiations progressing? What impact are tariffs having on U.S. companies? Most importantly, how long will this negative pressure on cryptocurrencies persist?
Effects of U.S. Tariffs
This morning, we discussed upcoming significant developments. We noted that PMI data will provide critical insights into the initial impacts of tariffs. The PMI data from S&P Global, set to be released on Wednesday, will illustrate the effects of the tariffs announced on April 2 and the 90-day pause decision from April 9 on the economy.
The PMI for manufacturing is expected to drop from last month’s level of 50.2 to 49.4, while the PMI for service providers is predicted to decrease from 54.4 to 52.8. As we have often mentioned, a reading above 50 indicates growth, whereas below 50 signifies contraction within the sector.
Stephen Stanley, Chief Economist at Santander U.S. Capital Markets, shared his thoughts:
“I am most interested in how the manufacturing sector responds to the tariffs. Have orders dropped? Are inventories piling up? How much have material costs increased?”
To avoid abnormal deviations in growth targets due to tariffs, the European Union recently reduced interest rates by 25 basis points. The U.S. is expected to gain clearer insights into what tariff effects mean for companies on Wednesday.
Will Cryptocurrencies Rise?
Should the PMI data come in unexpectedly low, it could lead to fluctuations in bond markets and increase pressure for Trump to ease tariffs. If numbers reflect production issues, particularly figures below 50, it may pave the way for tariff reductions that could also ease pressures on cryptocurrencies.
Indeed, Trump, who has consistently issued threats toward China, has now begun to suggest that they can reach agreements through dialogue. This indicates we may have reached the peak of tariff-related fears, with a potential rapid decline from this peak that would be beneficial for cryptocurrencies.
In the coming days, another critical aspect to monitor regarding cryptocurrencies will be the details of discussions with China, the EU, and other countries/regions affected by tariffs. Trump and his team have provided extensive updates recently, with reports stating that at least 15 agreements are on the table.
