Dogecoin, XRP Drop 7% as Trump’s Tariff Threats Shake Markets; Bitcoin Options Expiry Looms

What to Know

• Major cryptocurrencies, including Dogecoin (DOGE), Ethereum (ETH), and XRP, declined by over 5% in early Asian trading hours amid market uncertainty.
• Bitcoin (BTC) options worth $12.2 billion are set to expire, with a max pain point at $85,000, potentially influencing short-term price action.
• Investors are watching the upcoming U.S. Personal Consumption Expenditure (PCE) report, a key inflation metric that could impact Federal Reserve rate decisions and overall market sentiment.
• Growing trade tensions, particularly President Donald Trump’s renewed tariff threats on Canada and the European Union, have contributed to market jitters.

Cryptocurrency Markets React to Economic Uncertainty

Dogecoin (DOGE), Ethereum (ETH), and XRP (XRP) saw significant losses early Friday, retracing gains from a mid-week relief rally. The downturn comes as traders shift focus to the upcoming U.S. Personal Consumption Expenditure (PCE) report, a key indicator of inflation that could influence Federal Reserve policy decisions.

The broader crypto market also reflected this bearish trend. Dogecoin led the drop, tumbling 7%, while XRP and ETH each slid more than 5%. However, not all assets suffered losses—Toncoin (TON) was one of the few exceptions, registering a 5% gain over the same period.

Bitcoin Options Expiry and Market Sentiment

Adding to market pressure, Bitcoin options worth approximately $12.2 billion are set to expire, with the max pain point—where the largest number of options contracts will expire worthless—at $85,000. This event could lead to heightened volatility as traders reposition their holdings in response to price movements.

According to market analysts, the crypto sector remains in a wait-and-see mode, with options traders signaling a lack of strong bullish conviction in the near term. Market data suggests that Bitcoin’s price action remains heavily influenced by broader macroeconomic trends, including inflation data and central bank policies.

The PCE Report’s Impact on Crypto Markets

The PCE index measures inflation across a broad spectrum of consumer spending categories and plays a crucial role in shaping Federal Reserve policy. Elevated PCE readings suggest rising inflation, which could prompt the Fed to maintain higher interest rates for longer. Such a scenario tends to dampen risk appetite, leading investors to favor traditional safe-haven assets like gold over Bitcoin and other cryptocurrencies.

Conversely, lower-than-expected PCE numbers could boost market sentiment, increasing the likelihood of Fed rate cuts and injecting more liquidity into financial markets. Historically, such conditions have benefited Bitcoin, reinforcing its role as both a speculative asset and an inflation hedge.

The next PCE report is scheduled for release on March 28, and traders anticipate potential market volatility surrounding the event. Bitcoin’s reaction will likely be tied to how the data influences expectations regarding future Fed rate decisions.

Trump’s Tariff Threats Weigh on Global Markets

Financial markets have been on edge since Thursday following renewed tariff threats from former U.S. President Donald Trump. Trump warned of imposing stricter tariffs on Canada and the European Union, particularly if their trade policies were deemed harmful to the U.S. economy.

In response, Canadian Prime Minister Mark Carney stated that Canada would seek to diversify its trade relationships, emphasizing that the U.S. could no longer be considered a “reliable partner.” This growing uncertainty has added another layer of risk to global financial markets, with investors closely monitoring developments.

Trade tensions of this magnitude historically lead to shifts in capital allocation. Market participants seeking stability may move funds away from riskier assets like Bitcoin, at least in the short term. This could potentially slow BTC’s role as a hedge against economic uncertainty, particularly if the trade war escalates.

The Bigger Picture: Bitcoin’s Position in a Shifting Economy

The global financial landscape remains highly sensitive to monetary policies set by major economies, particularly the U.S. With increasing economic uncertainty and volatility in traditional markets, investors are reassessing their portfolios and hedging strategies.

While Bitcoin has often been positioned as a hedge against inflation and economic instability, prolonged geopolitical tensions and inflationary concerns may cause some institutional investors to favor alternative asset classes. Analysts warn that if economic instability continues to escalate, capital allocation to BTC could face short-term challenges.

Despite these immediate risks, long-term fundamentals for Bitcoin remain strong. Institutional interest in BTC is growing, adoption rates continue to rise, and broader macroeconomic trends still favor digital assets in the long run. However, the coming weeks will be critical in determining Bitcoin’s next major move.

Market Outlook: What’s Next for Crypto Traders?

With a combination of macroeconomic uncertainty, upcoming Bitcoin options expirations, and shifting geopolitical risks, traders are bracing for heightened volatility. Key factors to watch include:

• The March 28 PCE report and its impact on Federal Reserve rate expectations.
• The resolution (or escalation) of Trump’s tariff threats and their broader market implications.
• Bitcoin’s ability to hold key support levels as options contracts expire and traders adjust their positions.

For now, crypto investors remain cautious, closely monitoring global financial developments while preparing for potential market swings in the days ahead.