Federal Reserve's Inflation Warning Puts Crypto Markets on Edge
The cryptocurrency market remains cautious as investors digest the Federal Reserve Chair Jerome Powell's warnings about inflation and a slowing labor market. Bitcoin and Ethereum are trading flat, while altcoins show mixed results. New tariffs and potential inflation are contributing to the market's uncertainty.
InflationCryptocurrencyFederal ReserveTariffsMarket SentimentReal Estate NewsSep 25, 2025
Despite a recent rate cut, which typically provides bullish momentum, the cautious sentiment is prevailing. Bitcoin (BTC) is trading in a tight range, holding steady around $113,000, while Ethereum (ETH) saw a marginal dip, trading near $4,200. The broader altcoin market showed mixed results, with tokens like Solana (SOL) declining by 3% in 24 hours and over 9% for the week, making it one of the largest weekly losers among the top assets.
A primary concern weighing on the markets is the impact of new tariffs, which Powell explicitly warned could contribute to rising prices. While he called it a “reasonable base case” to view tariff inflation as a one-time phenomenon, he stressed that “uncertainty around the path of inflation remains high” and Federal officials must “make sure that this one-time increase in prices does not become an ongoing inflation problem.” This warning suggests the Fed may be compelled to maintain a hawkish posture if tariff-induced inflation becomes entrenched, limiting the potential for further rate cuts.
Market data reflects the current risk-off mood. Leveraged positions saw approximately $288 million in liquidations over the past 24 hours, led by ETH and BTC. Furthermore, institutional interest appears to be pausing, as outflows from exchange-traded funds (ETFs) extended into a second day. Spot Bitcoin ETFs saw $103.6 million in redemptions, while spot Ethereum ETFs recorded over $140 million in outflows, nearly doubling the previous day’s figures. Analysts at Glassnode noted that while overall accumulation remains intact, the slowdown in ETFs “suggests a pause in institutional demand.”
Meanwhile, social sentiment indicators point to growing impatience and bearishness among retail investors, a factor that some analysts at Santiment suggest could ironically be a “strong sign” that the market is awaiting a potential breakout as smaller traders exit the space. Overall, the crypto market is stalled by macroeconomic anxiety, as it awaits a clearer signal on the future path of inflation and the Federal Reserve’s monetary policy response.
Frequently Asked Questions
What is the main concern for the cryptocurrency market according to the article?
The main concern for the cryptocurrency market is the impact of new tariffs and the potential for higher inflation, as warned by Federal Reserve Chair Jerome Powell.
How are Bitcoin and Ethereum currently trading?
Bitcoin (BTC) is trading in a tight range around $113,000, while Ethereum (ETH) has seen a marginal dip, trading near $4,200.
What is the impact of new tariffs on the market, according to Powell?
Powell warned that new tariffs could contribute to rising prices, and while he views it as a one-time phenomenon, there is uncertainty around the path of inflation.
How are institutional investors responding to the current market conditions?
Institutional interest appears to be pausing, with outflows from exchange-traded funds (ETFs) extending into a second day, particularly in Bitcoin and Ethereum ETFs.
What are the social sentiment indicators suggesting about retail investors?
Social sentiment indicators point to growing impatience and bearishness among retail investors, which some analysts suggest could be a sign that the market is awaiting a potential breakout.
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