Recently, a series of statements from Trump has become the focus of global financial markets, and for the already highly volatile cryptocurrency market, it may bring far-reaching impacts. Below, we will analyze the potential impacts of Trump's statements on the cryptocurrency market and make bold predictions for the trend in the coming week.
Tariff Policy: Increased Volatility in the Cryptocurrency Market
Trump announced that he will declare tariffs on drugs and chips in the coming week, and also stated that if the EU does not fulfill its investment obligations to the U.S., a tariff of 35% will be imposed, and if fulfilled, it will be 15%. The adjustment of tariff policies will directly affect global trade relations and economic conditions. Based on past experience, escalating trade frictions often lead to increased market risk aversion. In such cases, some investors may withdraw funds from traditional risk assets, such as the stock market, and seek relatively safe assets. Although cryptocurrencies as a whole also belong to risk assets, mainstream cryptocurrencies like Bitcoin may be viewed by some investors as a safe-haven choice due to their decentralized nature and the lack of direct interference from any single country's policies, thereby attracting capital inflows and driving prices up.
Taking the period of intensified Sino-U.S. trade friction in 2019 as an example, the price of Bitcoin experienced a certain degree of upward volatility at that time. However, it should be noted that the cryptocurrency market is also influenced by various factors such as its own supply and demand relationship and regulatory policies; the capital inflow triggered by tariffs does not necessarily lead to a sustained rise in cryptocurrency prices. In addition, tariff policies may affect global economic growth expectations, and if economic growth slows, it may also raise concerns among investors about demand for the cryptocurrency market, leading to a price decline.
Comments related to the Federal Reserve chairman: changes in monetary policy expectations affecting cryptocurrency.
Trump mentioned that he might soon announce a new Federal Reserve chairman, which complicates market expectations regarding U.S. monetary policy. The Federal Reserve's monetary policy has a significant impact on global financial markets, and this is also true for the cryptocurrency market.
If the new Federal Reserve chairman leans towards a more accommodative monetary policy, such as lowering interest rates and increasing the money supply, this will make funds in the market more abundant and reduce the cost of capital. In this case, on one hand, some funds may flow into the cryptocurrency market in pursuit of higher returns, pushing up cryptocurrency prices; on the other hand, a low-interest-rate environment will also reduce the opportunity cost of holding cash, making investors more willing to take risks, thereby increasing investment in cryptocurrencies. Conversely, if the new chairman implements a tightening monetary policy, it may lead to a capital flow back to the dollar, causing funds to exit the cryptocurrency market and putting pressure on prices. For example, during the period of continuous interest rate hikes by the Federal Reserve in 2018, the overall performance of the cryptocurrency market was sluggish, and prices fell sharply.
Bold predictions for the cryptocurrency trend in the coming week.
Based on Trump's statements, the cryptocurrency market is likely to experience significant volatility in the following week.
In terms of tariff policies, once a specific tariff adjustment plan is announced, the market will respond quickly. If tariff policies trigger an escalation of global trade tensions, mainstream cryptocurrencies like Bitcoin may experience a surge in the short term, especially when market risk aversion sharply increases. However, if the impact of tariff policies is digested by the market or if other adverse factors emerge, such as regulatory agencies strengthening oversight of cryptocurrencies, then cryptocurrency prices may experience a decline.
Regarding the uncertainty related to the Federal Reserve chairman, the market will closely monitor subsequent news dynamics. Before Trump announces the new Federal Reserve chairman candidate, investors will trade based on various speculations, which will further exacerbate volatility in the cryptocurrency market. If the market expects the new chairman to implement an accommodative monetary policy, the cryptocurrency market may see capital inflows, pushing prices up; conversely, if the market expects monetary policy to tighten, cryptocurrency prices may be suppressed.
Trump's remarks have brought much uncertainty to the cryptocurrency market, making the trend in the coming week full of variables. Investors need to closely monitor relevant policy dynamics, while combining technical analysis and market sentiment to make cautious investment decisions in response to possible market changes.
