Bitcoin Slips as Trump’s Tariff Threats Weigh on Risk Appetite

Bitcoin edged lower on Friday, facing a muted weekly performance as investor sentiment remained cautious over U.S. trade tariffs under President Donald Trump. The market also awaited key PCE inflation data, which could shape expectations for Federal Reserve interest rate policy.

• Bitcoin (BTC) fell 1.1% to $104,379.6 by 00:33 ET (05:33 GMT).
• The cryptocurrency traded between $100,000 and $105,000 over the past three days after rebounding from an earlier slump.

Key Market Drivers

1. Trump’s Trade Tariff Threats Hit Risk Markets

• Trump threatened 100% tariffs on BRICS nations, warning against their efforts to establish an alternative currency to the U.S. dollar.
• He also confirmed that his 25% tariffs on Canada and Mexico will take effect on Saturday.
• A 10% duty on Chinese imports could also be imposed this weekend.
• The threat of a global trade war weighed on investor sentiment, leading to risk aversion in crypto markets.

2. Wild Bitcoin Price Swings

• Bitcoin initially dropped below $100,000 earlier this week after China released a new AI model, sparking a broader risk-off sentiment in global markets.
• However, strong buying interest helped Bitcoin rebound, though it remained within a narrow trading range.

3. El Salvador’s Bitcoin Law Amendment Under IMF Deal

• El Salvador’s lawmakers scaled back the country’s Bitcoin law, making Bitcoin acceptance voluntary for the private sector.
• This move was part of a $1.4 billion funding deal with the IMF, which had raised concerns over El Salvador’s Bitcoin-backed economic policies.
• The change allows the country to access IMF relief, but it dampened optimism over Bitcoin’s role in national economies.

4. Altcoins and Broader Crypto Market Trends

• Ethereum (ETH) rose 1.6% to $3,243.87.
• XRP fell 1% to $3.0866.
• Trump-themed memecoin ($TRUMP) slid 7.2%, down 60% from its post-launch peak.
• Solana (SOL), Cardano (ADA), and Polygon (MATIC) traded flat to lower.
• Dogecoin (DOGE) dropped 1.2%.

5. PCE Inflation Data in Focus

• Traders await December’s Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge.
• The Federal Reserve kept interest rates steady this week but signaled a cautious approach to rate cuts, citing persistent inflation risks.
• A higher-than-expected PCE reading could reduce expectations for near-term rate cuts, potentially impacting Bitcoin and risk assets.