US Inflation Risk Threatens Bitcoin Rally as Trump Tariff Fears Ease
Bitcoin and major altcoins rebounded after US tariff concerns eased when former President Trump stepped back from planned EU tariffs. The move helped curb volatility following roughly $900M in liquidations earlier this week. Still, economists warn that sticky US inflation could re-accelerate in 2026 — potentially above 4% — which would constrain crypto upside by keeping the Fed from cutting rates. Peterson Institute’s Adam Posen and Lazard’s Peter Orszag cited tariffs and a tight labor market as inflationary pressures. JPMorgan research also expects the Fed to keep policy rates unchanged through 2026 (around 3.5%–3.75%). Over the past 24 hours, CoinGlass data shows more than $600M of leveraged crypto positions were liquidated across ~138,000 participants, split roughly evenly between longs and shorts; Binance and Bybit recorded the largest forced closures. A recovery in Japan’s long-term government bonds eased global borrowing costs temporarily, reducing pressure on risk assets. Key statistics: Bitcoin near $90,000, ETH ~ $3,012, SOL ~ $130, DOGE ~ $0.13; 24h liquidations exceeded $600M, earlier total liquidations near $900M. For traders: tariff news removed a near-term catalyst for risk-off selling, but persistent inflation and rate path uncertainty are the dominant macro risks that could spur renewed volatility and liquidations in leveraged crypto positions.
Neutral
The immediate market reaction was positive: tariff fears eased and major crypto assets recovered from a sharp sell-off, which is a short-term bullish signal. However, the article highlights stronger and persistent US inflation risks, forecasts above 4%, and an expected Fed that may keep rates higher for longer. Higher-for-longer rates are typically bearish for risk assets including crypto because they raise discount rates and borrowing costs, increasing the likelihood of further liquidations in leveraged positions. Historical parallels: tariff or geopolitical headlines often produce short-lived volatility and rallies when resolved, while inflation surprises (or sustained high inflation) have led to longer periods of risk-off conditions (e.g., 2022 tightening cycle). Therefore the net assessment is neutral — short-term relief from tariff news supports a rally, but medium- to long-term downside risk remains elevated unless inflation and rate trajectories improve. Traders should watch US inflation data, Fed commentary, bond yields, and liquidation metrics (CoinGlass, exchange reports) for signs of renewed stress. Risk management: reduce leverage, set tighter stops, and monitor funding rates and exchange-level positions to avoid forced liquidations during renewed volatility.