Recall the conflict in Iran a few weeks ago, which triggered a decline in cryptocurrencies. The primary reason was a rapid increase in oil prices leading to significant inflationary concerns. Now, hours before the anticipated Fed interest rate decision, Trump re-emerges and makes statements perceived as a call to halt the risk fluctuations in the markets.
The Decline of Cryptocurrencies
Although ETH and BTC lacked momentum initially, they have begun to decline. Valid reasons exist for potentially further rapid drops in the days and hours ahead. Trump recently declared that if Russia does not reach a settlement with Ukraine within ten days, secondary sanctions will be enacted. Previously, he expressed disappointment with Putin, stating he decided to shorten a 50-day period.
“Starting today, ten days. We will impose customs duties within ten days. I’m considering secondary sanctions on Russian oil. If I sanction Russia, I’m not worried about oil. We have plenty of oil in the U.S. and we will increase production,” Trump stated.
Since the threat from Russia, oil has surged more than 5%. In his remarks, Trump dismissed the price increase, indicating he is not concerned by stating that “oil prices are currently quite low.”
I’m highlighting these details to warn against the increased risks before the potential intensification of the downturn. We might witness significant volatility this week. If Russia reciprocates with equally intense responses to Trump’s escalated tone, tensions could significantly intensify. With tariff impacts already pushing Powell away from rate cuts, the oil price surge could lead to no rate cuts this year. As this concern preoccupies more investors, we might observe further downturns in cryptocurrencies within hours. However, the crypto market is full of surprises, and BTC might defy chaos. We will see.
Information: What are secondary sanctions? Trump’s mention of secondary sanctions on Russia implies a threat of imposing tariffs of 100% or more on countries purchasing oil products from there. This means that the tariff agreement with China becomes ineffective, as China is Russia’s largest oil client.
