Bitcoin markets remain cautious as President Trump stokes fears of a trade war

Bitcoin markets remain cautious as President Trump stokes fears of a trade war with Canada, Mexico, and China. The markets are highly uncertain

President Trump's administration is preparing for a busy Wednesday with the introduction of trade tariffs on Canada, Mexico, and China. This move stokes fears of a trade war, a concern that has already affected Bitcoin markets.

Despite some drops in price, BTC has found support at lower levels. This is largely because traders are seeking a safe haven in times of uncertainty, driven by factors such as the trade war and a possible recession.

However, with Canada and China also introducing their own tariffs, the global supply chain is being disrupted, adding another layer of complexity to an already volatile market.

This in-between period, described by Treasury Secretary Scott Bessent as a detox period, sees markets still adapting to the new spending cuts announced earlier in the year.

Trump has declined to comment on a possible recession and has even hinted that financial pain will be necessary before things improve.

This signals more macroeconomic difficulties, which could pressure treasury yields and push Bitcoin into another bull market.

According to the CPI, inflation is expected to fall from 3.0% to 2.9% in February. Core inflation, which excludes food and energy, is expected to drop from 3.3% to 3.2%.

The trade war between Canada and America has calmed down slightly, with Canadian officials stating that they will respond to any tariffs with their own, in a bid to prevent a full-blown trade war.

Traders remain concerned about an economic slowdown, which could pressure treasury yields and push Bitcoin into another bull market.

Using one-year inflation, the New York Fed survey projected an upswing of 3.0% to 3.1%. Traders, however, are seeing a possible rate cut in June, providing more support for BTC.

However, if interest rates remain high, the Fed may need to maintain higher interest rates. Bitcoin does not earn interest, so investors may be less inclined to buy cryptocurrency.

Trump’s trade tariffs on aluminium and steel imports will go into effect on Wednesday. Job openings have already started to rise in February, anticipating the tariffs.

“We expect core CPI inflation”, wrote TD Securities analyst, “to cool down in February following the January jump to 0.45%, as price resets came in firmer than expected in the services segment”.

“We look for slowing in both the goods and services segments, with owners’ equivalent rent (OER) inflation dropping to a 3-month low. On a year-over-year (YoY) basis, headline and core CPI inflation are likely to drop by a tenth each to 2.9% and 3.2%, respectively”.

Egg prices were a key driver of inflation, rising 53% in January from the year before. Conversely, average grocery prices rose 1.9% over the same period. Other products, such as tomatoes and bread, dropped in price, buffering the inflated price of eggs.

Brooke Rollins, the Department of Agriculture Secretary, said that, due to Trump’s five-point plan to tackle bird flu, egg prices dropped to $1.85 per dozen, down from $5 in January.

Further drops in inflation may provide a reason for a rate cut, providing much-needed relief from what is called the cost-of-living crisis. This would ease up personal budgets so that people can buy more Bitcoin in preparation for uncertain times.