The cryptocurrency market is exhibiting a lot of caution, with major digital assets trading flat or seeing slight declines, especially as investors digest recent economic uncertainty that emerges from comments by Federal Reserve Chair Jerome Powell. Speaking at an economics event, Powell highlighted the challenging outlook for policymakers, noting the twin risks of a “potentially higher inflation and a slowing labour market.”
Despite a recent rate cut, which typically provides bullish momentum, the cautious sentiment is prevailing. Bitcoin (BTC) is trading in a tight range, holding steady around $113,000, while Ethereum (ETH) saw a marginal dip, trading near $4,200.
The broader altcoin market showed mixed results, with tokens like Solana (SOL) declining by 3% in 24 hours and over 9% for the week, making it one of the largest weekly losers among the top assets.
New tariffs contribute to rising prices
A primary concern weighing on the markets is the impact of new tariffs, which Powell explicitly warned could contribute to rising prices. While he called it a “reasonable base case” to view tariff inflation as a one-time phenomenon, he stressed that “uncertainty around the path of inflation remains high” and Federal officials must “make sure that this one-time increase in prices does not become an ongoing inflation problem.”
This warning suggests the Fed may be compelled to maintain a hawkish posture if tariff-induced inflation becomes entrenched, limiting the potential for further rate cuts.
Market data reflects the current risk-off mood. Leveraged positions saw approximately $288 million in liquidations over the past 24 hours, led by ETH and BTC. Furthermore, institutional interest appears to be pausing, as outflows from exchange-traded funds (ETFs) extended into a second day.
Spot Bitcoin ETFs saw $103.6 million in redemptions, while spot Ethereum ETFs recorded over $140 million in outflows, nearly doubling the previous day’s figures. Analysts at Glassnode noted that while overall accumulation remains intact, the slowdown in ETFs “suggests a pause in institutional demand.”
Growing impatience in retail investors
Meanwhile, social sentiment indicators point to growing impatience and bearishness among retail investors, a factor that some analysts at Santiment suggest could ironically be a “strong sign” that the market is awaiting a potential breakout as smaller traders exit the space.
Overall, the crypto market is stalled by macroeconomic anxiety, as it awaits a clearer signal on the future path of inflation and the Federal Reserve’s monetary policy response.
