This is how traders reacted to the new statement by US President Donald Trump that the country’s trade deficit has shrunk by 78%, thanks to tariffs, and could become positive already this year.
“The United States trade deficit has been reduced by 78% thanks to tariffs levied on other companies and countries,” Trump said in a posting on Truth Social late Wednesday. – This year it will enter positive territory for the first time in decades.”
Tariffs can act as a tax on imports, which can raise prices in the real economy and complicate the path for interest rates. When markets start pricing in “higher rates for longer,” the dollar tends to strengthen and risk assets lose momentum.
Reaction to macroeconomic factors
Bitcoin has spent the past two weeks once again trading as a macroeconomic proxy, reacting to changes in liquidity and rate expectations rather than any specific cryptocurrency news, writes coindesk.com.
There is also a real data context that makes trading a hot topic.
In early January, the U.S. trade deficit narrowed sharply to about $29.4 billion, the lowest since 2009. Meanwhile, analysts point to declining imports, rising exports and the subsequent effects of threats of tariffs.
But economists also noted that much of the fluctuation was due to non-monetary gold flows, which can create a cleaner picture of the monthly data than the underlying trend.
If the tariff story intensifies and leads to a stronger dollar and tighter financial conditions, rallies may have trouble holding their ground.
If it dissolves into political noise, however, the cryptocurrency will revert to watching flows, leverage levels and the ability of buyers to regain lost levels.
