Bitcoin News Today: Fed Holds Rates Amid Trump Tariffs and Crypto Market Volatility

The U.S. Federal Reserve maintained its benchmark interest rate within the 4.25–4.5% range during its latest policy meeting, a decision that has been repeated for the fifth consecutive time amid ongoing economic uncertainties and heightened political pressures from President Donald Trump [1]. The decision was made against the backdrop of a Q2 GDP report that showed stronger-than-expected growth of 3%, which Trump quickly used as leverage to urge Fed Chair Jerome Powell to cut interest rates. Despite these pressures, the central bank chose to hold rates steady, emphasizing its data-driven approach and cautious stance [6].

Bitcoin's price response was immediate and pronounced. Just hours before the Fed’s decision was announced, BTC traded near $119,000, but quickly retreated to under $116,000 following the policy announcement [1]. The cryptocurrency managed to recover some ground by Thursday, though it faced renewed downward pressure as Trump introduced a new round of tariffs targeting numerous trade partners. The bearish sentiment persisted, dragging BTC down to a three-week low of $114,000 by the end of the week [1]. However, BTC managed to close the week at around $115,350, marking its highest monthly close since the beginning of the year.

Alternative cryptocurrencies experienced even more severe declines compared to BTC. Ethereum (ETH) and XRP each fell by approximately 5%, while smaller altcoins such as Solana (SOL), Dogecoin (DOGE), and Cardano (ADA) recorded losses of up to 10% [1]. The overall cryptocurrency market, with a total market cap of $3.83 trillion, saw a drop in value as investors reacted to the broader macroeconomic uncertainty and the political turbulence in the U.S. [1].

The introduction of new tariffs has further complicated the economic outlook. Trump’s newly announced trade measures have significantly increased the average tariff rate to 15.2%, up from 13.3% in the previous period [7]. This aggressive stance is expected to have a ripple effect on global markets, particularly those that are highly dependent on international trade. Analysts have warned that the increased trade barriers could lead to higher inflation and further market volatility [7].

The interplay between Trump’s policy agenda and the Fed’s monetary strategy has created an unpredictable environment for global markets. While the Fed has consistently emphasized its commitment to managing inflation and supporting economic growth through data-driven decisions, Trump’s repeated calls for rate cuts have introduced an element of uncertainty. The tension between the executive and the central bank has sparked concerns about the independence of monetary policy [4].

Looking ahead, market participants are closely monitoring the Fed’s next move. A potential rate cut in September is widely anticipated to provide a much-needed boost to cryptocurrency markets, which have historically responded to shifts in monetary policy [6]. However, the ongoing uncertainty around Trump’s tariffs and broader economic conditions continues to create a volatile environment [6].

This week’s developments underscore the deep interconnections between traditional and digital financial markets. Political actions, such as Trump’s tariffs, and central bank decisions can quickly and significantly impact asset prices. As the administration continues to push for more aggressive economic policies, the balance between controlling inflation and stimulating growth remains a critical focus [4].

Source:

[1] CryptoPotato - https://cryptopotato.com/fed-holds-rates-trump-strikes-with-new-tariffs-as-bitcoin-and-alts-react-your-weekly-crypto-recap/

[4] TikTok - https://www.tiktok.com/@cnbc/video/7532960357074095415

[6] Yahoo.co - https://ca.finance.yahoo.com/news/bank-of-canada-signals-possible-cuts-ahead-but-holds-key-policy-rate-steady-for-now-at-275-183136253.html

[7] ZeroHedge - https://www.zerohedge.com/markets/wheres-your-taco-now-futures-slide-global-markets-tumble-after-trump-unleashes-harsh