Fed Rate Hikes Loom as Trade War Escalates—Crypto Braces for Impact

Trade tensions spark inflation fears, forcing the Fed’s hand—and risking another crypto bloodbath. Higher rates could drain liquidity from risky assets, leaving Bitcoin and altcoins gasping. Wall Street’s ’risk-off’ playbook strikes again—because why let a good crisis go to waste?

No concessions, no clarity

According to Sri-Kumar, the recent interactions between the U.S. and China demonstrate a lopsided dynamic. While the U.S. administration has toned down its tariff threats, China has not made significant concessions in return.

“Trump, after a big talk about 145% tariffs, is now willing to come down without any concession on the Chinese part,” Sri-Kumar noted.

As such, the president weakened the U.S.’s negotiating stance. He criticized what he perceives as an inconsistent strategy from the administration, pointing out that markets and foreign leaders now anticipate that tough talk from Washington will eventually soften if markets begin to falter.

“That is a very bad negotiating strategy,” he said.

He further noted that the trade war has perpetuated uncertainty for U.S. manufacturers, who remain wary of new or returning tariffs if negotiations sour. While markets are rallying on encouraging comments from the White House, the uncertainty companies faced just days ago “has not gone away.”