Bitcoin and Ethereum Tumble Amid Trade War Fears and Economic Uncertainty
Cryptocurrencies experienced a downturn on Friday, with Bitcoin (BTC) and Ethereum (ETH) dropping by 1% and 2.5% respectively. This decline coincided with former President Donald Trump’s renewed accusations that China violated its trade agreement with the United States. The news overshadowed the release of the U.S. Personal Consumption Expenditures (PCE) Price Index data, which aligned with market expectations.
Cryptocurrencies Fail to Rally Despite In-Line Inflation Data; Trump’s Tariff Threats Resurface
The U.S. core PCE data for April showed a 2.5% year-over-year increase, the lowest since March 2021, down from 2.7% the previous month. The overall annual PCE fell to 2.1%, slightly below the anticipated 2.2%. On a monthly basis, both core and headline PCE rose by 0.1%.
The PCE is the Federal Reserve’s preferred gauge for measuring inflation. Market analysts suggest that the Fed may adopt a wait-and-see approach regarding interest rate cuts, given that the PCE data met market forecasts.
Initially, the cryptocurrency market remained stable following the release of the PCE data. However, it quickly plummeted after Trump hinted at potential new tariffs over the weekend, a pattern that has emerged since the announcement of tariffs on Canada and Mexico in February.
The sell-off was triggered by a post from Trump on Truth Social, alleging that China had “totally violated” its trade agreement with the U.S. He claimed his 145% tariffs on China had a devastating impact, pushing them into “dire economic straits.” Trump stated that these effects led to a “quick deal” to prevent civil unrest in China, which stabilized the Chinese economy.
“The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED THEIR DEAL WITH US. So much for being Mr. NICE GUY!” Trump wrote.
Following Trump’s statement, speculation arose that the U.S. might be planning broader technology sanctions against China, further dampening risk sentiment, according to Bloomberg.
This uncertainty triggered a broader sell-off in cryptocurrency assets. Bitcoin dipped below $105,000 for the first time since May 20, falling 1% on the day and 3.7% over the week. Major altcoins like Ethereum, XRP, and Solana also experienced significant declines, dropping 4%, 4.8%, and 5.8%, respectively, in the last 24 hours.
Several cryptocurrency sectors followed the downward trend, indicating that investors may be anticipating another weekend slump.
The meme coin sector suffered a double-digit decline following the announcement. Leading tokens such as Dogecoin (DOGE), Shiba Inu (SHIB), PEPE, and Official Trump (TRUMP) fell by 8%, 6%, 6%, and 6%, respectively.
The artificial intelligence (AI) sector also took a hit, falling nearly 10%. Major tokens like Bittensor (TAO), Near Protocol (NEAR), Internet Computer (ICP), Artificial Superintelligence (FET), and Render (RENDER) dropped between 5% and 9%.
Notably, the cryptocurrency market’s reactions to tariff announcements in recent weeks have been less severe compared to the sharp declines observed between February and April. This suggests that market participants are becoming more accustomed to the fluctuating tariff rhetoric from Trump, although it continues to cast a shadow of uncertainty over the market.
- US Core PCE data for April fell to 2.5%, in line with expectations, while the annual PCE rate was 2.1%, below expectations of 2.2%.
- Trump claims China violated its trade agreement with the US.
- Bitcoin and Ethereum dropped 1% and 2.5%, respectively, in the last 24 hours amid uncertainty in the macroeconomic outlook.
Stay ahead of the curve in the fast-paced crypto world – explore the latest updates and trends at Cryptonewsfeeds.com.