Bitcoin as a safe haven and altcoins on hold due to tariffs

Trump's aggressive tariff plan puts the Federal Reserve in jeopardy and sows fear in the cryptocurrency market. Is there hope after the surprising PPI data?

The cryptocurrency market has been mired in a deep correction over the past 30 days, with Donald Trump's tariff policy acting as the main catalyst for this debacle. The Federal Reserve's (Fed) concern about the inflationary potential of these tariffs halted any hint of future interest rate cuts, sowing uncertainty among investors. However, an unexpected respite came this Friday with the release of lower-than-expected Producer Price Index (PPI) data, opening a faint window of hope for a possible change in the Fed's stance.

At an alarming 21/100, according to Coinmarketcap data, signaling the highest fear since events like the FTX crash or the Covid-19 crisis. / Coinmarketcap

The Trump Effect: Inflationary Tariffs and the Fed's Rigidity

The aggressive tariff policy promoted by former President Donald Trump became a determining factor for the Federal Reserve. Fears that these tariffs would trigger a new wave of inflation led the central bank to adopt a cautious stance, avoiding any promises of future interest rate cuts. The logic is clear: if the tariffs generate higher prices, the Fed would be forced to raise rates again, reversing any previous monetary easing.

PPI Surprise: Light at the End of the Tunnel for Cryptocurrencies?

Amid this gloomy outlook, the Producer Price Index (PPI) data for the current month offered a glimmer of hope. The results reflected a sharper-than-expected slowdown in inflation, with figures significantly below consensus forecasts:

PPI MoM: -0.4% (vs. +0.2% expected). This monthly decline is the sharpest since March 2023.
PPI YoY: +2.7% (vs. +3.3% expected). This is the second consecutive month of annualized slowdown.
Core PPI MoM: -0.1% (vs. +0.3% expected). The core PPI also shows weakness, reaching its lowest level in nearly a year.
Absolute PPI level: 147.46 (vs. 148.04 previously).

These data suggest an easing in cost pressures for producers, which could potentially translate into lower inflationary pressures for the Consumer Price Index (CPI) in the coming months.

Macroeconomic Implications: Is a Dovish Turn by the Fed on the Horizon?

The Federal Reserve could interpret this PPI data as a sign that its restrictive monetary policy is beginning to take effect, which could lessen the urgency of keeping interest rates at elevated levels. If this trend of slowing inflation persists, the likelihood of the Fed considering rate cuts in the remainder of 2025 increases, a scenario that crypto markets could begin to anticipate.

The key to a potential crypto market recovery lies precisely in a change of tone ("dovish move") by the Fed, whether through actual interest rate cuts or even clear hints that these could occur in the near future.

Crypto Market Analysis: Extreme Fear and Safe Haven in Bitcoin

The current state of the cryptocurrency market reflects a clear sense of risk-off, characterized by:

Fear and Greed Index: At an alarming 21/100, according to data from Coinmarketcap, signaling the highest level of fear since events such as the FTX crash or the Covid-19 crisis.

Altcoin Season Index: At a very low 17/100, confirming that capital is taking refuge in Bitcoin.

Bitcoin Dominance: Reaching 62.6%, its highest level since April 2021.

Negative Flows in Crypto ETFs: Approximately -$193 million in the last 30 days, indicating institutional distrust, possibly driven by expectations of prolonged high rates or adverse regulation.

Ethereum (ETH) Crash: With a 16.26% drop over the past 30 days, contrasting with Bitcoin's slight increase (+0.6%), this suggests a massive rotation toward the digital asset perceived as a "safe haven." Altcoins and smart contract projects are also suffering.

Key Dynamics: Bitcoin as Digital Gold in the Storm

In this environment of macroeconomic uncertainty, Bitcoin has demonstrated greater resilience (+0.6% in 30 days) compared to the rest of the market, strengthening its narrative as "digital gold." At the same time, stablecoins are experiencing modest growth (+1.26%), suggesting that investors are holding liquidity while waiting for better opportunities, but without investing in altcoins ("Others" category with a drop of -4.39%).

Ethereum's low dominance (7.2%) and its high implied volatility (79% versus Bitcoin's 57%) reflect theThey are addressing the perceived risks in their ecosystem, including competition from other Layer 1 blockchains and regulatory uncertainties. The drop in the market capitalization of "Other" cryptocurrencies (-4.39%) confirms that capital is not flowing into more speculative projects such as memecoins or DeFi.

The high implied volatility in both Bitcoin (57) and Ethereum (79) suggests that traders anticipate sharp market movements, driven by macroeconomic events (Fed decisions, inflation data) and geopolitical or regulatory risks (SEC actions against exchanges).

Short-Term Trends and Strategies

Historically, when Bitcoin's dominance exceeds 60%, it usually precedes rallies in altcoins. However, the current context presents significant differences, with weak institutional flows and a lack of signs of accumulation in altcoins.

In the short term, the key strategy appears to be caution. Bitcoin is positioned as the safest haven given its resilience and growing institutional adoption. For altcoins, the recommendation is to "wait and see," avoiding entering projects without clear catalysts until the Fear and Greed Index breaks out of the extreme zone (below 30) and Ethereum shows clear signs of recovery, such as the return of flows to its ETFs.

Close monitoring of volatility is crucial, as derivatives could offer opportunities in an environment of high price volatility.

Forecast: If upcoming US inflation data (especially the CPI) proves favorable, there could be temporary relief in the altcoin market. However, the overall trend of the cryptocurrency market will continue to depend largely on the Federal Reserve's monetary policy and global liquidity.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency trading is highly volatile and carries significant risks, including the total loss of your invested capital. Consult a financial advisor before making any investment decisions.