In a volatile kickoff to August, Bitcoin and Ether are navigating choppy waters as the dollar flexes its muscles against major currencies. With the Dollar Index (DXY) surging past the 100 mark, a threshold not seen since late May, cryptocurrency traders are on high alert. This uptick comes on the heels of former President Donald Trump’s announcement of new sweeping tariffs, setting off a chain reaction across financial markets.
Dollar Flexes Muscle Amid Tariff Turmoil
Cryptocurrencies saw a rollercoaster start this month as the dollar’s resurgence prompted traders to reassess their positions. Bitcoin dipped to $114,290 before rebounding to hover near $115,900, according to CoinDesk data. Meanwhile, Ether, following a similar trajectory, bounced back from an early drop to $3,616 and is now trading near $3,690.
The catalyst? Trump’s latest tariff move. The administration announced a 10% universal tariff on goods entering the U.S., with certain countries facing a 15% floor, depending on their trade surplus with the U.S. Robin Brooks, a senior fellow at the Brookings Institution, explained on X that these tariffs are now fueling the inflationary pressures that were initially expected earlier this year. “Inflation is coming…,” Brooks stated, underscoring the market’s apprehension.
Inflation and Interest Rates: A Delicate Dance
The inflationary ripple effects are beginning to show. Data released Thursday highlighted an increase in the core personal consumption expenditures (PCE) price index, which rose 2.6% year-over-year in June. This inflationary pressure poses a significant challenge to the Federal Reserve’s monetary policy. While the central bank opted to keep interest rates unchanged at 4.25% earlier this week, speculation is rife regarding potential rate cuts later in the year. As explored in our recent coverage of Bitcoin, Ethereum, and XRP Slump as US Interest Rate Decision Nears, the anticipation of interest rate changes continues to weigh heavily on crypto markets.
Matt Mena, a crypto research strategist at 21Shares, noted that market expectations for a September rate cut have diminished considerably. The CME FedWatch Tool now places the odds at just 41%, a stark drop from earlier forecasts. Mena emphasized the importance of the upcoming U.S. nonfarm payrolls report, scheduled for release Friday, which could provide crucial insights into the Fed’s next moves.
Yen’s Slide and Crypto’s Volatility
Adding to the complex interplay of factors, the Japanese yen has slid to its lowest level in four months, trading past 150.50 per dollar. This depreciation follows cautious commentary from Bank of Japan Governor Kazuo Ueda, who signaled a reluctance to implement further rate changes in the near term.
Crypto markets are poised for potential turbulence. As Mena pointed out, the release of the payrolls data could be pivotal. “The data likely determine whether Powell has the green light to act—or whether the Fed stays sidelined,” he remarked. Historically, Bitcoin has mirrored global liquidity conditions, suggesting that a dovish turn by the Fed could propel BTC higher, with targets of $150K and $200K remaining within the realm of possibility for this cycle. For more on Bitcoin’s price movements ahead of key financial meetings, see our Bitcoin Price Calms at $118K Ahead of FOMC Meeting, BONK Dumps Hard: Market Watch.
Looking Ahead: Uncertainty and Opportunity
As traders digest these developments, the path forward for cryptocurrencies remains uncertain yet filled with potential. The interplay between macroeconomic indicators and crypto prices is more pronounced than ever, raising questions about the resilience of digital assets in the face of traditional financial pressures.
Will Bitcoin and Ether sustain their upward momentum if the Fed opts for a dovish pivot? And how will the ongoing tariff saga further impact global markets? These are the questions that will keep investors on their toes in the coming weeks. What’s clear, however, is that the crypto landscape is as dynamic as ever, offering both challenges and opportunities for the astute observer.
Source
This article is based on: Bitcoin, Ether Start August on a Shaky Note as Dollar Index Tops 100; Yen Hits 4-Month Low Ahead of Nonfarm Payrolls
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
