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Market snapshot: risk-off sentiment returns
The crypto market weakened over the weekend as investors moved into a more cautious stance. Bitcoin slipped to around $88,700 and Ethereum fell near $2,930, while other leading altcoins including Dogecoin and Solana recorded declines of more than 1%. The Fear and Greed Index remained in the 'fear' zone, reflecting broad risk aversion across crypto and equity markets.
Trade tensions trigger volatility
Renewed trade-war headlines were the immediate trigger. Former President Donald Trump threatened a 100% tariff on Canadian goods, citing disagreements over trade deals and electric vehicle tariff adjustments. The proposed changes center on Canada’s decision to reduce EV tariffs and alter levies on products like canola. Given the substantial trade volume between the U.S. and Canada, such a tariff escalation could rattle global markets, including cryptocurrencies.
How tariffs translate to crypto moves
Direct economic measures that raise uncertainty—like steep tariffs—tend to depress risk assets. Crypto, often treated as a high-beta asset, can see amplified selling when geopolitical or trade risks grow. That said, legal and political hurdles, including potential Supreme Court challenges to tariff policies, mean the threat may not be immediate or certain.
FOMC decision looms: interest rates and crypto outlook
All eyes are on the Federal Reserve’s interest rate decision scheduled for Wednesday. Economists widely expect the Fed to hold rates in the 3.50%–3.75% range, with some polls placing the odds of no change above 98%. Crypto traders will be especially alert to guidance on future rate cuts and comments about the timing of monetary easing. Any hint that the Fed expects to cut rates later in the year could spur a risk-on rebound for Bitcoin, Ethereum, and other altcoins.
Leadership changes and forward guidance
Market expectations will also factor in upcoming leadership changes at the Fed, including the appointment of a new Chair. A shift in tone from the central bank could materially affect liquidity conditions and investor appetite for speculative assets like cryptocurrencies.
Corporate earnings and macro headlines to watch
Earnings reports from the so-called Magnificent 7—Apple, Microsoft, Meta Platforms and peers—are due this week and could influence crypto sentiment. These firms are major drivers of AI investment and broader market risk-on flows. Strong results could lift equities and encourage crypto buying, while weak results could deepen the downturn.
Other market risks
Traders will also monitor U.S. political developments, including the risk of a government shutdown and any progress on the CLARITY Act. ETF flows remain a relevant metric too: recent ETF outflows, and patterns in tokens like XRP, continue to be watched by institutional and retail crypto investors.
Overall, the near-term crypto outlook will hinge on whether trade rhetoric escalates, what the Fed signals about rates, and how corporate earnings affect broader risk appetite. Investors should expect heightened volatility and watch key macro releases closely.
Source: crypto
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