Crypto Slump: Bitcoin Drops Amid Trump Tariffs and Inflation Fears

The crypto market has been experiencing a downturn in recent days, with Bitcoin (BTC) and other major cryptocurrencies facing a decline in prices. This slump can be attributed to several factors, including President Donald Trump's tariffs and inflation fears.

Bitcoin, the world's largest cryptocurrency, has seen its price drop for three consecutive days, reinforcing the macro uncertainty looming over the broader crypto market. Over the same period, BTC has failed to reclaim the $100,000 mark, while Ethereum (ETH) has struggled to bounce above $3,000. Similarly, Solana (SOL) has remained below $200, and Ripple (XRP) has stayed muted, trading below $2.50 at the time of writing.

Market sentiment ahead of the U.S. jobs report has been weak, with increased hedging activity in put options (bearish bets) observed by QCP Capital. This suggests increased downside risk protection and potential bearish sentiment. The firm noted that there was persistent caution despite the skew still favoring calls.

The U.S. January jobs report (non-farm payroll) is expected to provide clues on the Federal Reserve's rate plans. Economists anticipate a surge of 170,000 jobs following a 256,000 gain in December. If the actual report misses the January targets, the Fed might be inclined to cut rates further, which would be positive for BTC and risk-on assets. However, if the jobs report shows a larger gain than estimated, a solid labor market would prompt the regulator to hold current interest rates steady for longer, which could be detrimental to BTC and crypto overall.

Key levels to track, according to the Coinglass liquidation heatmap, are $90,000, $100,000, and $110,000. These key liquidity pockets typically act as price magnets, especially during liquidity-driven rallies.