Tariff Uncertainty Weighs on Crypto and Traditional Markets
The global cryptocurrency market is facing downward pressure due to ongoing trade war concerns, with analysts predicting that this trend will continue until at least early April. According to experts from blockchain analytics firm Nansen, tariff disputes remain a key factor influencing both crypto and traditional financial markets.
Bitcoin (BTC) has experienced a 17% decline since January 20, when US President Donald Trump announced new import tariffs on Chinese goods following his inauguration. Despite several positive crypto-related developments, market sentiment has been largely shaped by fears of escalating global trade tensions.
Nicolai Sondergaard, a research analyst at Nansen, stated during the Chainreaction Daily X show on March 21 that tariff-related uncertainty will persist in the short term.
BTC/USD, 1-day chart.
“I’m looking forward to seeing what happens with the tariffs from April 2nd onwards. Maybe we’ll see some of them dropped, but it depends on whether all countries can reach an agreement. That’s the biggest driver at this moment,” Sondergaard said.
Risk assets, including cryptocurrencies, may remain directionless until there is greater clarity on tariff policies, which could happen between April and July. If an agreement is reached or tariffs are eased, it could serve as a positive market catalyst, driving renewed investor confidence.
President Trump’s reciprocal tariff rates are scheduled to take effect on April 2, despite earlier remarks from Treasury Secretary Scott Bessent suggesting a possible delay.
Federal Reserve’s High Interest Rates Add to Market Pressure
Beyond trade tensions, high interest rates set by the Federal Reserve continue to weigh on investor sentiment. Sondergaard explained that investors are waiting for a significant economic downturn before the Fed begins cutting rates.
“We’re waiting for the Fed to see proper ‘bad news’ before they will really start cutting rates,” he said.
Market analysts currently estimate an 85% chance that the Fed will maintain its current interest rate levels at the next Federal Open Market Committee (FOMC) meeting on May 7, according to the CME Group’s FedWatch tool.
Despite ongoing market volatility, some analysts believe that concerns about inflation and recession are temporary. Iliya Kalchev, a dispatch analyst at Nexo digital asset investment platform, noted that the Federal Reserve views tariff-related inflation concerns as transitory.
Fed target interest rate probabilities. Source: CME Group’s FedWatch tool
“Markets may now expect upcoming economic data with greater confidence,” Kalchev said. “Cooling inflation and stable economic conditions could further boost investor appetite, driving additional upside for Bitcoin and digital assets.”
Key Economic Reports to Watch
Market participants are closely monitoring upcoming economic data releases, which could influence the Fed’s future policy decisions and impact investor sentiment. Kalchev highlighted several key reports that could provide insights into the economy’s health and the likelihood of interest rate cuts.
“Keep an eye on key reports, including Consumer Confidence, Q4 GDP, jobless claims, and next week’s crucial PCE inflation release, to gauge the likelihood of future rate cuts,” he advised.
With uncertainty surrounding tariffs and monetary policy, traders and investors will be watching these developments closely in the coming weeks, as they could dictate the next major movements in the crypto market.
