Crypto Markets Waver at August Kickoff with Bitcoin, Ether Under Pressure; Dollar Strengthens, Yen Drops Before U.S. Payrolls Report

Bitcoin (BTC) and Ether (ETH) started the month under pressure as heightened geopolitical tensions and a resurgent U.S. dollar triggered broad risk aversion. A fresh round of U.S. tariffs pushed the dollar index above 100, unsettling digital assets amid mounting inflation concerns.

BTC, ETH Recoil as Dollar Strengthens

BTC dropped as low as $114,290 early Friday, coming close to a key trendline support anchored to the April and June lows. It has since rebounded above $115,900. Ether mirrored the move, falling to $3,616 before stabilizing near $3,690, per CoinDesk data.

The dip came as traders adjusted to the growing likelihood of prolonged financial tightening—reflected in both currency and bond markets—following the tariff escalation.

Trump’s Tariffs Stoke Inflation Expectations

President Donald Trump on Thursday introduced wide-reaching tariffs targeting imports from countries running trade surpluses with the U.S. The universal 10% rate, originally announced in April, will now escalate to a 15% floor for such nations, with some Southeast Asian economies facing steeper levies.

This policy shift has already begun to feed into inflation readings. June’s core personal consumption expenditures (PCE) price index—the Fed’s preferred inflation gauge—rose 2.8% year-on-year, matching May’s pace and the highest since February.

“The inflation that was expected from tariffs is now showing up, and it’s lifting the dollar,” said Robin Brooks, senior fellow at the Brookings Institution.

The Dollar Index (DXY) has surged over 3% in the past four weeks, breaching the 100 mark for the first time since May and pressuring yield-sensitive assets like crypto.

Rate Cut Odds Fade as Fed Holds

Earlier this week, the Federal Reserve kept rates steady at 4.25%, while signaling it would wait for “greater confidence” in disinflation before pivoting. Market expectations for a September rate cut have since tumbled, with CME FedWatch showing just a 41% chance—down from 75% a month ago.

“The Fed is in no hurry to cut,” said Matt Mena, strategist at 21Shares. “Powell made that clear. Now, all eyes are on the labor market.”

Yen Sinks as BOJ Stays Patient

The Japanese yen dropped to 150.50 per dollar in Tokyo trading, hitting its lowest level in four months. The move followed comments from Bank of Japan Governor Kazuo Ueda, who hinted that rate hikes remain unlikely in the near term.

Friday’s Jobs Data Becomes the Pivot Point

With BTC and ETH increasingly tracking liquidity cycles, Friday’s U.S. nonfarm payrolls report could set the tone for August.

“If job growth slows, the Fed may have room to ease,” Mena noted. “In that case, crypto could rally. BTC’s next leg higher remains tied to broader macro conditions, with targets in the $150K–$200K range still plausible.”