From Panic to Pivot: Tariffs and Fed Signals Reshape Crypto Sentiment

Cryptocurrencies began the week on a steadier footing following a weekend of volatility, with Bitcoin recovering to hover just above $114,000 and ether reclaiming ground above $3,550.

The rebound comes after sharp sell-offs triggered by nearly $1 billion in U.S. spot Bitcoin ETF outflows late last week, the worst in months.

The market downturn was compounded by mounting global tensions, with former U.S. President Donald Trump announcing new tariffs on Asian and European imports. Simultaneously, the Federal Reserve signaled a continued reluctance to lower interest rates, cooling risk appetite across both crypto and traditional markets.

Despite the headwinds, opportunistic buying is already starting to show. “The market reaction may have been exaggerated,” said Jeff Mei, COO at BTSE, noting that traders are stepping back in ahead of the U.S. open.

Altcoins took the lead on Monday’s recovery. XRP rallied over 5% to outpace major tokens, followed by gains in Dogecoin, Cardano, Binance Coin, and Solana, all posting increases of more than 3%.

Institutional activity appears to be softening the blow from recent volatility. Augustine Fan, Head of Insights at SignalPlus, noted that deeper liquidity from professional desks is helping the market absorb shocks more efficiently than in previous cycles. “A selloff of this size in the pre-ETF era would’ve caused more lasting damage,” he said.

Still, caution prevails. Bitcoin remains under the key $118,000 resistance level, and ether must stay above $3,500 to avoid triggering further algorithmic selling. With ETF inflows stalling, broader sentiment remains fragile.

Outside the crypto sphere, global financial markets presented a mixed backdrop. U.S. equity futures inched higher following a weaker-than-expected jobs report that reignited hopes of a policy shift by the Fed. In Asia, stocks pared losses, led by a bounce in Hong Kong tech shares. Meanwhile, oil prices dipped after OPEC+ concluded a series of output hikes, and U.S. Treasury yields climbed modestly to 4.24%.

As the market looks toward a pivotal fourth quarter, analysts expect macroeconomic pressures, including inflation and trade policy shifts, to weigh heavily on risk assets. For now, crypto traders are navigating a delicate balance between tactical buying and lingering uncertainty.