Bitcoin Set for Short-Term Rally Amid Tariff Fallout and Fed Cut Hopes

Crypto markets are showing signs of a rebound after a volatile week driven by U.S. tariff announcements and growing speculation around upcoming economic data and Federal Reserve rate cuts. Traders are shifting their focus from past headwinds to future catalysts, with expectations of a bitcoin (BTC) bounce in the short term.

On Wednesday and Thursday, President Donald Trump announced a 10% tariff on all imports, sparking sharp market reactions. Bitcoin, ether (ETH), Solana (SOL), XRP, and other tokens surged ahead of the speech, only to fall sharply as global markets declined. By Friday morning, however, prices began recovering. BTC held above $83,100, ETH reclaimed $1,800, and major altcoins like XRP, SOL, and ADA posted gains over 2%.

CryptoQuant data showed significant inflows of BTC, ETH, and XRP into exchanges ahead of the announcement, signaling investor intent to sell amid uncertainty. Bitcoin transfers spiked to 2,500 BTC per block, with ETH inflows peaking at 80,000 per hour. XRP transfers to Binance surged to 130 million in one hour.

Despite the recent sell-off, markets are eyeing Friday’s U.S. non-farm payroll report for further direction. A weaker-than-expected labor print could increase the likelihood of rate cuts, with markets currently pricing in four 25 basis point reductions in 2025. Lower interest rates typically boost crypto assets by making traditional investments less attractive and weakening the dollar, enhancing bitcoin’s appeal as an inflation hedge.

Singapore-based QCP Capital noted elevated volatility and rising demand for downside protection but added that risk assets remain oversold. With lighter positioning and fading macroeconomic pressures, conditions may be ripe for a short-term rally in digital assets.