Bitcoin and Ether slipped early Friday amid a surge in the U.S. dollar, triggered by newly announced tariffs from President Donald Trump. The heightened macro uncertainty pressured risk assets and sent shockwaves across global markets, including crypto.
BTC and ETH React to Dollar Strength, Trade Tariff Jitters
Bitcoin (BTC) fell to $114,290 in early trading, briefly testing a key uptrend line from the April and June lows, before recovering above $115,900. Ether (ETH) mirrored the move, dropping to $3,616 before rebounding toward $3,690.
The initial selloff coincided with a breakout in the U.S. Dollar Index (DXY), which climbed above 100 for the first time since May. The DXY has now gained more than 3% over the past month, as investors recalibrate expectations around inflation and rate policy.
Trump’s Tariffs Spark Inflation Fears
On Thursday night, President Trump announced an expansion of U.S. tariffs. A universal 10% rate remains in place for all imports, but a 15% minimum tariff will now apply to countries with a trade surplus with the U.S. Select Southeast Asian nations face even steeper levies.
The policy shift is expected to exacerbate inflationary pressures, adding to concerns already reflected in June’s data. The Fed’s preferred inflation measure, the core PCE index, rose 2.8% year-over-year—its highest since February and unchanged from May.
“The tariffs are finally impacting inflation—and that’s lifting the dollar,” said Robin Brooks, senior fellow at the Brookings Institution.
Fed Stays on Hold, Markets Scale Back Rate Cut Bets
The Federal Reserve kept rates steady at 4.25% earlier this week, signaling caution amid persistent inflation. Following the decision, the market has pared back expectations for a September rate cut.
According to the CME FedWatch Tool, odds of a September cut have fallen to 41%, down from 58% last week and 75% a month ago.
“Chair Powell made it clear: more confidence in disinflation is needed,” said Matt Mena, crypto strategist at 21Shares. “Now, all eyes are on the jobs report.”
Yen Weakens to 4-Month Low Ahead of Payrolls
The Japanese yen fell past 150.50 per dollar in early Tokyo trading, hitting its lowest level since April. The move came after dovish comments from Bank of Japan Governor Kazuo Ueda, who signaled that further tightening was unlikely in the near term.
Jobs Report Looms Large for Crypto and Macro
Friday’s U.S. nonfarm payrolls report will serve as a key catalyst for both crypto markets and global assets. A softer print could revive hopes of Fed easing and drive renewed inflows into risk assets.
“If labor data points to a slowdown, the Fed may pivot sooner,” Mena added. “That would be supportive for Bitcoin, keeping the $150K–$200K upside scenario alive.”
