The cryptocurrency market is plummeting due to macroeconomic pressures from prolonged inflation and new tax policies, while the probability of the Fed cutting interest rates in September has declined sharply.
Policy decisions from the White House, along with rising inflation data, have led to capital withdrawals from risky assets, creating a wave of sell-offs on Bitcoin, Altcoins, and the US stock market.
MAIN CONTENT
Persistent inflation and the decision to raise tariffs by the US have placed significant pressure on the entire risky asset market, including cryptocurrencies.
The likelihood of the Fed cutting interest rates in September has decreased, leading to increased defensive sentiment and the crypto market witnessing a wave of strong sell-offs, especially in DOGE, XRP, ADA, SOL.
The core PCE index – the Fed's preferred inflation measure – exceeded expectations, putting pressure on US stocks and the cryptocurrency market, potentially leading to strong volatility in upcoming sessions.
Why is the cryptocurrency market down sharply today?
The crypto market is negatively impacted as macro factors like prolonged inflation and new US tariffs increase uncertainty, pushing investors into a selling mindset.
The combination of persistently high inflation and a tough stance on trade policy has created a significant 'headwind' for the entire risky asset market, including cryptocurrencies.
Jerome Powell, Chairman of the Federal Reserve (2025), according to FOMC Press Conference
The market continuously faces negative macro data: From higher-than-expected inflation indices to new tariff measures against many trading partners, especially Canada, causing risks to surge. At the same time, the prospect of interest rate cuts in 2025 is fading, making safe asset yields more attractive and applying pressure to the cryptocurrency market.
As a result, capital flows are sharply withdrawing from large coins, especially after profit-taking moves or shifting to more stable assets by institutions and large investors (whales). This is a typical manifestation when the macro environment becomes highly unstable, according to a survey by Fidelity Digital Assets (2025).
What impact does the new US tariff policy in 2025 have on the risky asset market?
The tariff increase on many trading partners, notably Canada, creates new pressure on global economic growth, driving a defensive sentiment in the risky asset market, especially cryptocurrencies.
Raising import tariffs to 40% on many key goods will spread effects across all markets, disrupting capital flows on a global scale, not just in stocks or crypto.
Ray Dalio, Founder of Bridgewater Associates, stated on CNBC, 08/2025
According to a new decree from the US President (07/2025), the import tariff on Canada increased from 25% to 35%, while other partners increased from 10% to a maximum of 40%, effective 7 days after signing. This period prolongs uncertainty, causing investors to worry about possible trade retaliation or global supply chain disruptions.
History shows that whenever there are significant changes in trade policy, the 'risk-off' sentiment (shifting to safe assets) rises, putting simultaneous downward pressure on both the stock market and cryptocurrencies (source: Research Affiliates, 2023).
When will the 'stubborn' inflation of the US continue to apply pressure?
The core PCE index – the Fed's preferred inflation measure – maintains its upward trend, exceeding economists' expectations and continuing to be above the Fed's 2% target, making the prospect of monetary policy easing seem distant.
In June, core PCE rose by 0.3% compared to the previous month, higher than 0.2% in May and in line with expectations, but the year-to-date cumulative reached 2.8% (exceeding the forecast of 2.7%). This indicates that inflation pressures have not diminished, particularly in the core goods group excluding food and energy.
In the context of prolonged high interest rates aimed at controlling inflation, risky assets like stocks and cryptocurrencies lose their attractiveness, as capital costs increase and capital continues to shift to bonds and gold – according to Goldman Sachs (2025).
How has the expected interest rate cut data from the Fed changed?
The probability of the Fed cutting interest rates by 0.25% in September has dramatically decreased to 41% after a series of negative inflation data in Q3, while the market's forecast for maintaining interest rates in September has increased to 58%.
In just 3 days, expectations for an interest rate cut fell from over 60% to below 43% (according to CME Fed Watch 01/08/2025), causing a 'defensive' sentiment to dominate the risky asset market such as cryptocurrencies and stocks. Large capital flows quickly withdrew from cryptocurrencies, allowing for increased selling pressure in recent sessions.
The Fed's expected interest rate cut has rapidly plummeted after core inflation showed no signs of cooling, causing most investors to choose to stay out or shift to defensive assets like USD, gold, and government bonds.
Harry Chambers, Economic Assistant, Capital Economics, reports to clients 08/2025
Experience from previous cycles shows that whenever the market adjusts interest rate expectations in a tough direction, cryptocurrencies like Bitcoin and Ethereum often undergo strong corrections in both price and trading volume.
Which coins have dropped sharply leading the sell-off?
Dogecoin, Ripple, Cardano, and Solana have become the focal point of the strongest selling pressure, with price drops ranging from 6% to 8% in the past 24 hours, leading the wave of sell-offs across the entire Altcoin market.
These are all large-cap assets with high investor dispersion, often heavily impacted when capital flows lean towards safe assets. Besides large coins, mid-cap tokens also perform negatively as foreign capital withdrawals sharply from crypto ETF products in the US and Europe.
Coin performance in the last 24 hours: Dogecoin (DOGE) down 8%, Cardano (ADA) down 8%, Ripple (XRP) down 6%, Solana (SOL) down 6.7%, Binance Coin (BNB) down 3%, Bitcoin (BTC) down 3% (at one point dipping below $115,000, then recovering slightly)
Data from CryptoRank and TradingView shows that not only large coins but the entire cryptocurrency market has entered a 'risk-off' state, with overwhelming selling pressure across all coin/Token groups despite the technical foundation.
How do Treasury yields and US securities affect crypto?
US stocks (S&P 500, Nasdaq) adjusted simultaneously with the crypto market, clearly reflecting the risk-averse sentiment as inflation and tight monetary policy last longer than expected.
The S&P 500 fell by 37 basis points on the day, leading to a trend of capital flow shifting away from risky assets, although panic has not yet emerged – indicating that investors are becoming more defensive.
As safe assets gradually regain an advantage, the market will witness strong corrections in speculative products, especially cryptocurrencies which have a higher beta coefficient than traditional stocks.
Janet Yellen, US Secretary of the Treasury, analyzes at the Jackson Hole Economic Symposium, 2025
Treasury yields rose slightly amidst inflation risk, but at the same time increased the opportunity cost of holding non-income-generating assets like Bitcoin and Ethereum. This is the main reason why short-term capital flow forecasts have become more cautious regarding the crypto market at the end of Q3 2025.
Will technical factors help the crypto market recover?
The cryptocurrency market's recovery ability in the current macro context mainly depends on new information about interest rates, trade negotiation processes, and inflation data for July–August 2025.
The report from Arcane Research (2025) indicates that prolonged strong sell-offs due to macro selling pressure, if extended beyond three sessions, could create attractive buying zones for long-term institutional investors, especially if confidence in improving Fed policy rebounds.
However, with the prospect of interest rates not decreasing and the US-Canada trade tension not easing, short-term technical indicators still lean towards a downward or sideways trend; large capital is waiting outside for clearer signals.
Early sell-off phases tend to have a contagion effect, but in this context, experienced investors with long-term vision can find opportunities if they know how to manage risks.
Brian Armstrong, CEO of Coinbase, responds to Bloomberg 08/2025
The general advice is that investors should be patient, adhere to a strict risk management strategy, avoid emotional trading or bottom-fishing when macro developments remain too uncertain, and closely monitor the Fed's new policy milestones.
What factors should cryptocurrency investors pay special attention to in Q3 2025?
Crypto investors should pay particular attention to the following information: US inflation data (PCE, CPI), trade negotiation progress between the US and major partners, the Fed's monetary policy moves, and movements of crypto ETF capital in North America and Europe.
JPMorgan experts note that fluctuations in the USD exchange rate, US Treasury yields, and developments in US-Canada relations will directly impact the attractiveness of the coin market in the short term. Additionally, expectations for major events like Bitcoin ETF Options or new regulatory policies from the SEC and FCA could stir the market at any time.
ETF data, US macro policies, and trade tension developments are currently the 'three arrows' significantly influencing all actions of capital flows in the cryptocurrency market, at least until the end of September 2025.
Kenneth Griffin, CEO of Citadel, stated in the 2025 annual report
Creating a flexible investment portfolio, monitoring institutional capital movements, and continuously updating policy information will help individual traders limit unnecessary losses and take advantage of deep corrections for the long term.
Summary of the impact of macroeconomic factors on the cryptocurrency market 2025
The year 2025 marks an unpredictable period for the cryptocurrency market as macro factors such as inflation, monetary policy, and US trade create strong leverage for all fluctuations. Experience from previous years shows that without clear signals of monetary easing from the Fed, the cryptocurrency market will continue to shake as new policies are activated.
The report from Fidelity Digital Assets (2025) states that, in the current context, large capital often chooses to stay out or prioritize income-generating assets (bonds, dividends…) rather than spreading into crypto, unless new data turns the tide.
Forecasts for Q3 2025 from many large investment banks (Goldman Sachs, JPMorgan) maintain a cautious view, emphasizing a diversified risk management strategy to protect portfolios during unexpected volatility.
Frequently Asked Questions
Why did Bitcoin drop sharply in the first session of August 2025?
Bitcoin plummeted due to concerns about prolonged inflation and new US tariff policies, causing the probability of a Fed interest rate cut to drop to 41%, shifting investor sentiment to a defensive stance.
How does PCE inflation affect cryptocurrency prices?
When the PCE index increases beyond expectations, inflation becomes uncontrollable, and the Fed's likelihood of easing policy is low, making risky assets like cryptocurrencies less attractive and more susceptible to heavy selling.
Will the new US tariff policy prolong the cryptocurrency sell-off sentiment?
Tariff increases create prolonged trade instability, causing capital flows to shift to safe assets and maintaining downward pressure on the crypto market in the short term.
Which coin has been sold off the most in this round?
Dogecoin, Cardano, Solana, Ripple, and BNB are under the most selling pressure, with DOGE and ADA dropping by up to 8%, and XRP and SOL falling over 6% in the last 24 hours.
Is the probability of the Fed cutting interest rates optimistic again in 2025?
Only when inflation data drops sharply or trade tensions ease will the Fed consider cutting interest rates; currently, experts assess this possibility to be quite low until the end of Q3 2025.
When can the crypto market recover?
The market will only truly recover when there is a clear signal of easing policy from the Fed or a more positive US-Canada trade negotiation process; investors should monitor monthly macro data.
What should be done to mitigate risks when the cryptocurrency market is highly volatile?
Investors should tightly manage risk, avoid emotional trading, focus on macro information, and manage their asset portfolios based on actual situations, only entering positions when there are clear signals.
Source: https://tintucbitcoin.com/tien-dien-tu-giam-do-lam-phat/
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