Cryptocurrencies Price Predictions as Trump Tariff News Spook Stagflation Risk

Cryptocurrencies price stabilized on Thursday after Donald Trump eased some auto tariffs. Bitcoin price held steady above $90,000, while Ethereum and XRP rose by over 3%. The total market cap of all coins approached $3 trillion. This crypto market analysis explains why these Trump tariffs may lead to stagflation and how it will affect their performance.

Cryptocurrencies Price Rise Despite Stagflation Risk

Stagflation has become one of the biggest risks facing the American economy this year because of the recently announced tariffs. Trump has hiked China’s tariffs by 10% this month on top of the 10% he levied in February. 

He has also announced a 25% tariff on goods from Mexico, a move that Justin Trudeau has called “dumb.” Trump has accused the two countries of not doing enough to prevent illegal immigration to the US and for allowing fentanyl to the country.

These Trump tariffs will likely lead to stagflation, a situation where slow economic growth is accompanied by high inflation. On inflation, the will make an already difficult situation worse as companies will be forced to increase prices. The most recent data showed that the headline and core inflation rose to 3.0% and 3.3%, respectively. 25% universal tariffs may push inflation higher in the coming months.

Stagflation is the worst case scenario for the Federal Reserve because there is no easy way of solving it. Interest rate cuts to boost economic growth will mostly lead to higher inflation, while rate hikes to lower inflation will affect economic growth. 

There are signs that the Fed will opt to cut interest rates. US bond yields and the dollar index have crashed, a sign that the market expects three or more cuts this year. 

Cryptocurrency Forecast Amid Trump Tariff Risks

Cryptocurrencies price will remain sensitive to the tariff news for a while. The hope that Trump will ultimately end these tariffs will likely lead to higher stock and cryptocurrency prices. A good example is what happened on Wednesday when the US paused auto tariffs, leading to a surge in the equities market, with the Dow Jones and Nasdaq 100 rising by 485 and 267 points, respectively. 

Higher stock prices may also lead to a strong surge in the crypto market since the two have a close correlation. 

However, some analysts are pessimistic about whether Trump is ready to end these tariffs. In an X post, Jim Cramer said that:

“My takeaway on auto tariff-issue – I think that Commerce Secretary Lutnick’s optimism might be misplaced. I do NOT see a deal on the horizon.”

If Cramer is right, and if Trump maintains his tariffs, there is a likelihood that cryptocurrency prices will have volatility for a while and then resume the uptrend. The bullish view is because of the potential for interest rate cuts.

Therefore, there are signs that cryptocurrencies price will do well in the long term even as stagflation risks remain. One Bitcoin price prediction is that it may surge to $100,000 in the near term, a move that will lead to higher altcoin values.