Although some external events have recently interfered, which may be considered the main cause of the decline, such as Trump proposing a 25% new tariff on the EU and then announcing a suspension.
VX: TZ7971
However, these events do not have a long-term impact on cryptocurrency prices, as the crypto market has likely become numb to Trump's constantly changing trade policies. The retreat of risk appetite and the stabilization of US dollar confidence are more likely reasons, which can be seen from the decline in US bond yields and the stabilization of the US dollar index, causing Bitcoin prices to fall.
Even if there are positive policy developments, it is undeniable that the cryptocurrency market has been relatively quiet recently, mainly because investor and corporate buying has come to an end. Now, investors are waiting for Trump's tariff policy to become clearer and for the Fed to officially announce an interest rate cut, which is expected to drive the cryptocurrency market to continue growing, with a medium to long-term direction of development.
Trump Stirs Trade War Sentiment Again, But Rate Cut Might Be Possible?
Last Friday, Trump accused China of violating the trade agreement with the US, and the White House subsequently stated that negotiations were hindered. The market further declined in the afternoon, triggered by reports that the US is planning more extensive sanctions on China. The US Trade Representative pointed out that China's delay in approving rare earth material exports is one of the reasons Trump accused China of defaulting.
Additionally, at a Pennsylvania rally, Trump announced that he would raise tariffs on steel and aluminum imports from 25% to 50% starting June 4th, aiming to protect the US steel industry. He also tried to facilitate a merger between Japan's Nippon Steel and US Steel to achieve local steel production. However, the market is not buying into such policies, and Trump's tariff uncertainty is expected to rise further. Moreover, the legal permissibility of such actions is another matter.
On Thursday, the court ruled that Trump cannot impose reciprocal tariffs globally through executive orders, requiring the White House to stop tariff policies within 10 days. The White House immediately filed an appeal but may also adopt other means to maintain or restart tariffs, adding more volatility to the potential success of US tariff policies. Treasury Secretary Bessent stated on Thursday night that the legal dispute over tariffs has not yet affected negotiations with China and claimed that several large deals are about to be completed, though negotiations with China seem slightly stalled.
After the US passed the tax cut bill, it must raise additional tariff revenue to support these expenditures. However, these trade uncertainties may again shake US fiscal and dollar confidence, which could help BTC prices continue to rise. Next, let's discuss the rate cut. The Fed's preferred inflation indicator's year-on-year growth rate has slowed to 2.1%, below expectations, and core inflation is slightly less than expected, which could help drive subsequent rate cuts.
Last week, the Fed also released meeting minutes from early May, showing that US interest rate policy will remain unchanged. The federal funds rate target range continues to be 4.2% to 4.5%, and the primary credit rate remains at 4.5%. Although the market and the Trump administration expect a rate cut, the Fed emphasizes that the current policy is prudent and appropriate, and future adjustments will depend on economic conditions and policy tools.
Powell stated that the current policy stance is suitable and will be adjusted according to FOMC decisions and actual operational needs. With inflation and unemployment stabilizing, a rate cut could potentially start as early as September 2025. The current wait-and-see policy is wise, with the Fed cautiously responding to global economic uncertainties. This reflects the Fed's strategy of balancing financial stability and economic growth.
Under the current highly uncertain trade policies, unstable US dollar confidence, US fiscal crisis, and the backdrop of potential rate cuts, Bitcoin would be an excellent medium to long-term investment choice. The recent pullback is merely a normal price correction after a rise, and we will continue to observe market developments. Barring any surprises, the next quarter may see renewed speculation about the US fiscal crisis.
Today's fear index is 58, with the market in a rare neutral state.
BTC's lowest was 103,068, and Ethereum's lowest was 2,468. Previously, I told everyone about BTC at 105,000 and Ethereum at 2,500, providing short-term entry opportunities. Today's market has started to rebound. Hold and watch, as tariffs are just a passing wind and not a long-term factor affecting the market. Trump's negotiation strategy follows a path of high pressure-negotiation-easing, only slightly impacting the short term. The long-term main theme is still rate cuts. The current market is unlikely to rise directly but will slowly and gradually rise with downward needle insertions. The market leverage is still somewhat high and needs to be cleared. Crypto players should manage their risk.
