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Crypto Retreats as Geopolitical Tensions Rise, Even as Weak Data Fuels Fed Pivot Speculation
Cryptocurrencies slid sharply on Thursday, diverging from resilient equity markets as mounting geopolitical concerns and tariff threats weighed on investor sentiment.
Bitcoin (BTC) fell over 2.5% in the past 24 hours to trade near $105,900, while losses were more severe across major altcoins. Ether (ETH), Solana (SOL), XRP, and Dogecoin (DOGE) each dropped between 5%–7%, erasing gains made earlier in the week.
The risk-off tone accelerated during U.S. evening trading hours, spurred by renewed fears of a potential escalation in the Middle East and trade tensions with China.
Markets Rattled by Trump Comments on Iran, Tariffs
President Donald Trump reignited geopolitical anxiety on Thursday with stark warnings about possible military conflict involving Iran. In remarks at the White House, Trump suggested Israeli strikes on Iranian nuclear facilities could be imminent if ongoing talks break down.
“There’s a chance of massive conflict,” Trump said. “I told our people to get out [of the region] because something could happen soon.”
While the president clarified that he had advised against immediate action, markets took notice of the shift in tone.
Simultaneously, Trump threatened renewed tariffs as early July trade deal deadlines approach — a stance that added to risk aversion.
U.S. equities, however, were largely unfazed, managing to post modest gains on the day. Crypto assets, by contrast, failed to hold support amid a late-day surge in volatility.
Macro Signals: Green Shoots or Warning Signs?
Despite the gloomier headlines, some market participants are eyeing potential silver linings.
Recent macroeconomic data — including Thursday’s softer-than-expected Producer Price Index (PPI) and initial jobless claims matching a multi-month high of 248,000 — suggest that the U.S. economy may be cooling faster than anticipated. Continuing jobless claims also climbed for a third consecutive week, reaching 1.956 million, the highest since November 2021.
These indicators are bolstering bets that the Federal Reserve may be compelled to adopt a more dovish stance, despite recent rhetoric to the contrary.
Still, President Trump continues to apply political pressure. Calling Fed Chair Jerome Powell a “numbskull,” Trump reiterated his dissatisfaction with the Fed’s refusal to cut rates, even suggesting he might “force something” — though Powell’s term runs through 2026.
Outlook: Crypto in Crosshairs
While crypto markets have broadly rallied over the past month, Thursday’s retreat underscores lingering fragility in the face of geopolitical risks and policy uncertainty. The divergence from equities — which appear to be pricing in a softer Fed — may reflect concerns unique to digital assets, including their sensitivity to liquidity flows and global risk sentiment.
Whether this marks the beginning of a deeper correction or a short-term shakeout remains to be seen. For now, traders are bracing for further volatility as macro headlines dominate the narrative.
