Price Analysis

Cryptocurrencies Price Predictions as Trump Tariff News Spook Stagflation Risk

Explore how cryptocurrencies price will be impacted by Donald Trump’s tariffs, which have reignited stagflation risks in the US.
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Cryptocurrencies Price Predictions as Trump Tariff News Spook Stagflation Risk

Highlights

  • Cryptocurrencies price may be at risk as Trump tariffs reignite stagflation risks.
  • Stagflation is a period characterized by high inflation and weak economic growth.
  • On the positive side, crypto prices may be boosted by Fed interest rate cuts.

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 action after Trump paused auto tariffs
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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. 

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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. 

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Frequently Asked Questions

How will cryptocurrencies price react to the growing stagflation risks?

A bullish case can be made on this stagflation risk because of the Fed actions. The base case is that stagflation will lead to Fed cuts, which will push crypto prices higher.

What is the base Bitcoin price prediction?

The short-term Bitcoin outlook is neutral for now as it is facing resistance at $92,000. A break above $95,000 will point to further gains ahead. A drop to last week’s low of below $80k is also possible.

How does the Fed actions affect crypto prices?

Bitcoin and other cryptocurrency prices react positively to Federal Reserve cuts. A good example of this is what happened when the Fed slashed rates during the pandemic.
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crispus

Crispus is a seasoned Financial Analyst at CoinGape with over 12 years of experience. He focuses on Bitcoin and other altcoins, covering the intersection of news and analysis. His insights have been featured on renowned platforms such as BanklessTimes, CoinJournal, HypeIndex, SeekingAlpha, Forbes, InvestingCube, Investing.com, and MoneyTransfers.com.

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Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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