Bitcoin (BTC) and Ether (ETH) kicked off August with heightened volatility as renewed U.S. trade tariffs boosted the dollar and reignited inflation concerns. Both assets saw intraday declines before partially recovering, reflecting broader market tension driven by global macroeconomic shifts.
Market Snapshot: BTC and ETH Rebound After Early Slide
Bitcoin briefly dropped to $114,290—testing its multi-month trendline support—before recovering above $115,900. Ether followed a similar trajectory, falling to $3,616 and later trading near $3,690, according to CoinDesk data.
The price swings mirrored broader risk-off sentiment, as the U.S. dollar strengthened in response to newly announced tariffs, spurring a flight to safety.
Tariffs Spark Inflation Worries and Dollar Rally
Late Thursday, President Donald Trump announced sweeping tariffs on goods from countries with trade surpluses with the U.S., raising baseline duties from 10% to a minimum of 15%. Certain Southeast Asian economies will face even higher rates.
The tariff move sent the Dollar Index (DXY) above 100 for the first time since May, extending a 3% rally over the past month. Rising tariffs are now visibly impacting inflation: June’s core personal consumption expenditures (PCE) price index rose 2.8% year-over-year—matching May’s pace and marking the highest reading since February.
“Markets are now pricing in the inflation that tariffs were expected to deliver months ago,” said Robin Brooks of the Brookings Institution. “That shift is pushing the dollar higher.”
Fed Holds Rates as Cut Odds Diminish
The Federal Reserve held rates steady at 4.25% this week, signaling a cautious approach amid mixed inflation signals. Traders have sharply reduced expectations for a September rate cut, with CME FedWatch data showing just a 41% probability—down from 58% a week earlier.
“The Fed is clearly waiting for stronger evidence of disinflation,” said Matt Mena, strategist at 21Shares. “The labor market will now be the deciding factor.”
Yen Slides to 4-Month Low; BOJ Holds Line
In FX markets, the Japanese yen dropped to 150.50 against the dollar in Tokyo trading—its weakest level in four months. The decline followed cautious remarks from BOJ Governor Kazuo Ueda, who signaled that additional rate hikes remain off the table for now.
Crypto Outlook Hinges on U.S. Jobs Report
With BTC and ETH increasingly influenced by macro liquidity trends, Friday’s U.S. nonfarm payrolls report will be key in shaping expectations for the Fed’s next move.
“If the labor market shows signs of cooling, it could reopen the door to Fed easing,” Mena added. “That scenario would likely be bullish for crypto. BTC’s longer-term targets of $150K–$200K remain on the table if liquidity improves.”
