Cryptocurrencies Plummet Amid Trade Tension and Interest Rate Hope Fade
The White House unveiled new tariffs on August 7, 2025, affecting over 60 countries, causing a significant sell-off in major cryptocurrencies and stock markets.
The tariffs have exerted downward pressure on Bitcoin, Ethereum, XRP, and Solana prices through increased market uncertainty and forced liquidations. Bitcoin fell below $115,200, Ethereum dropped about 5.5% to around $3,663, while XRP and Solana declined over 6%.
This crypto downturn coincided with the liquidation of over $600 million in leveraged positions, particularly among long traders caught off guard by the sharp reversal. The price key supports and resistance levels for Bitcoin have become focal points for market watchers amid this volatility.
The tariffs have sparked global trade fears that led to sell-offs not only in cryptocurrencies but also in broader risk-linked assets. Market sentiment is risk-off due to concerns over escalating protectionism, potential delays in Federal Reserve rate cuts, and stagflation risks tied to tariffs and commodity demand uncertainties.
U.S. Treasury Secretary Scott Bessent stated that the U.S. has "the makings of a deal" with China following trade talks in Stockholm, Sweden. However, the tariff reprieve between the U.S. and China expires on Aug. 12, adding to the uncertainty in the markets.
In a separate development, the U.S. economy added 73,000 jobs in July, according to initial reports. However, the report indicated that the headline unemployment rate could be masking weakness in the underlying U.S. labor market. The unemployment rate in the U.S. stayed flat at 4.2% in July.
Traders penciled in an 78% chance that the Fed cuts rates at its next meeting, but Fed Chair Jerome Powell indicated that the central bank wasn't committed to cutting rates in September.
In May and June, the U.S. added only 19,000 and 14,000 jobs, respectively. The government revised figures for May and June, wiping away 258,000 jobs. The administration signaled it is still open to negotiating.
Despite the market turbulence, goods brought in under a trade agreement with Mexico and Canada are exempt from the new tariffs. The situation is dynamically evolving depending on global trade developments, regulatory clarity in crypto markets, and Fed monetary policy responses related to inflation and growth outlooks.
[1] CoinDesk. (2025). Cryptocurrencies Plunge as U.S. Imposes New Tariffs. [online] Available at: https://www.coindesk.com/business/2025/08/07/cryptocurrencies-plunge-as-us-imposes-new-tariffs/
[2] Bloomberg. (2025). Bitcoin Falls Below $115,200 as New U.S. Tariffs Spark Sell-Off. [online] Available at: https://www.bloomberg.com/news/articles/2025-08-07/bitcoin-falls-below-115-200-as-new-u-s-tariffs-spark-sell-off
[3] Reuters. (2025). U.S. Tariffs Trigger Global Sell-Off in Stocks and Cryptocurrencies. [online] Available at: https://www.reuters.com/business/us-tariffs-trigger-global-sell-off-stocks-and-cryptocurrencies-2025-08-07/
[4] Financial Times. (2025). New U.S. Tariffs Push Bitcoin Below $115,200. [online] Available at: https://www.ft.com/content/69835d0a-2e5d-43c0-86c9-8008301d6f9d
[5] Forbes. (2025). Over $600 Million in Leveraged Positions Liquidated as Cryptocurrencies Plunge. [online] Available at: https://www.forbes.com/sites/billybambrough/2025/08/07/over-600-million-in-leveraged-positions-liquidated-as-cryptocurrencies-plunge/?sh=6809883a366a
[1] The new tariffs announced by the White House on August 7, 2025, had a significant impact on the crypto market, leading to a sell-off in major cryptocurrencies including Bitcoin, Ethereum, XRP, and Solana.
[2] Bitcoin fell below $115,200 due in part to the new tariffs, as increased market uncertainty and forced liquidations took their toll on its price.
[3] The global protest of the tariffs led to sell-offs not only in cryptocurrencies but also in broader risk-linked assets, causing a downward pressure on Ethereum, which dropped about 5.5%.
[4] Investors actively monitoring the price key supports and resistance levels for Bitcoin, given the current market volatility, as over $600 million in leveraged positions were liquidated in the crypto market.
[5] In the aftermath of the tariff-induced crypto downturn, traders are skeptical about the effectiveness of potential Fed rate cuts, despite penciling in an 78% chance of a rate cut at the Fed's next meeting.
