Simply put
- The White House revealed new tariffs on Thursday.
- An unexpectedly cool employment report indicated a sluggish labor market.
- The likelihood of rate cuts in September increased significantly, from 37% to 83%.
Bitcoin and other cryptocurrencies took a hit on Friday as investors reacted to the latest tariffs and the signs of a declining US labor market.
According to a cryptocurrency data provider, Bitcoin recently shifted to approximately $115,500, reflecting a drop of 2.1% in the past day. Ethereum fell 3.8% to $3,630, while XRP and Solana also saw losses, listing at $3.05 and $169, respectively.
The S&P 500 dipped 1.5% around noon, pushing the inventory index higher. The tech-heavy Nasdaq dropped by 2%, with the Dow Jones industrial average losing over 570 points.
On Thursday night, the Trump administration revised tariffs in more than 60 countries. A new set of tariffs will be effective from 12:01 AM on August 7, replacing the previous voluntary deadline set for Friday.
The US raised tariffs on Canadian imports from 25% to 35%. However, products covered by a trade agreement between Mexico and Canada are exempt. Brazil faced a sudden hike to 50%. The administration has expressed willingness to negotiate.
President Trump’s trade policy had a significant impact on the market a few months ago, but focus has since waned, particularly after the administration extended negotiations with several countries for 90 more days.
The tariff deferral between the US and China is set to end on August 12. Still, on Thursday, US Treasury Secretary Scott Bescent conveyed that a deal is being crafted with the country’s largest trading partner following trade discussions in Stockholm, Sweden.
The US economy reported an addition of 73,000 jobs in July, with the unemployment rate remaining steady at 4.2%. However, the job growth was less robust than anticipated, and previous figures for May and June were revised downwards, eliminating a total of 258,000 jobs.
In earlier months, the US added only 19,000 and 14,000 jobs, compared to the initial reports of 144,000 and 147,000, respectively.
This report may reveal underlying weaknesses in the US labor market, just days after Federal Reserve officials chose to maintain interest rates steady for their fifth consecutive meeting, targeting a range of 4.25% to 4.5%.
Even with ongoing pressure from Trump, Fed Chair Jerome Powell has indicated that the central bank isn’t committed to lowering rates in September. Two Federal Governors voiced dissent during the meeting, marking the first time since 1993 that two members of the Federal Open Market Committee opted out.
On Friday, traders perceived a 78% likelihood of rate cuts, a significant rise from the previous day’s 37%. Matt Mena, a research analyst at 21Shares, suggested that the clarity on potential cuts could positively influence the crypto market.
“If rate cuts become a certainty, Bitcoin might surge towards $125,000,” he stated, pointing to how such changes could invigorate liquidity conditions for high-risk assets like cryptocurrencies.
