Crypto News: Marketupdate February 2025
The American economy is in a complex and uncertain phase at the beginning of 2025. While geopolitical tensions, such as the renewed threat of a trade war under former president Trump, are causing shocks in financial markets, domestic economic dynamics also remain under pressure. The crypto market took a heavy blow due to global unrest, while job growth in January was disappointing despite a decline in unemployment. At the same time, the Federal Reserve is struggling with conflicting signals: inflation appears to be cooling, but still remains above target, while economic growth is slowing down. In this context, uncertainty about future interest rate policy is increasing, further raising pressure on policymakers.
February 3: Crypto Market Sees $2.24 Billion in Liquidations Amid Fears of a Trade War
In the past 24 hours, more than $2.24 billion in crypto positions were liquidated, with Ethereum (ETH) being hit the hardest, accounting for over $609 million in liquidations. The liquidations were partly triggered by geopolitical tensions, including former president Donald Trump’s announcement of new import tariffs on products from China, Canada, and Mexico. Major altcoins such as Ethereum and Cardano saw double-digit declines within an hour.
Analysts are comparing the impact of this incident to previous major crashes such as the FTX implosion and the market drop during the COVID-19 pandemic. Market sentiment has now fallen to “fear,” which is historically seen as a buying opportunity. (Source: CoinTelegraph)
February 7: U.S. Job Growth Disappoints in January, but Unemployment Falls to 4%
In January 2025, the U.S. economy added 143,000 jobs, which was lower than expected, while unemployment slightly declined to 4%. Job gains were mainly seen in healthcare, retail, and government sectors. At the same time, wages rose more strongly than predicted, with an average hourly earnings increase of 0.5% for the month and 4.1% year-over-year.
The Bureau of Labor Statistics significantly revised the 2024 job reports downward, but the number of people reporting being employed actually increased. Labor force participation rose slightly, and the broader unemployment rate remained stable. The Federal Reserve is closely monitoring the data but does not expect to cut interest rates in the near term despite the weaker job growth. (Source: CNBC)
February 11-12: Powell Confirms Strong Economy, Warns of Caution Regarding Interest Rate Cuts
Federal Reserve Chair Jerome Powell emphasized during his first congressional hearing since President Trump’s inauguration that the U.S. economy is strong, with unemployment at 4% and inflation close to the 2% target. He indicated that the Federal Reserve will remain cautious about interest rate cuts for the time being and will wait for further signals on inflation and the labor market before making policy changes. Powell stated that it is the Fed’s role to respond to trade tariffs and other policies, but not to determine or evaluate them.
During the hearing, questions were also raised about bank safety, Elon Musk’s role at the Treasury Department, and the potential impact of trade policies on the economy. Powell emphasized that the Fed is closely monitoring uncertainties around trade conflicts, immigration, and regulation but is maintaining a wait-and-see approach for now. Investors are expecting at most one interest rate cut later this year, depending on future economic developments. (Source: Reuters)
February 12: Inflation in the U.S. Rises to 3% – Highest Level Since June 2024
In January, inflation in the United States rose to 3%, the highest level since June last year, mainly due to higher prices for many goods and services, including a dramatic increase in egg prices caused by avian flu. Energy and food costs contributed significantly to these price increases, while core inflation (excluding food and energy) also rose slightly to 3.3% year-over-year.
This unexpected acceleration in inflation is causing concern among investors about possible interest rate hikes by the Federal Reserve, despite the Fed previously indicating caution regarding rate cuts. At the same time, uncertainty remains due to the trade and fiscal policies of the Trump administration, which economists fear could increase inflationary pressures rather than reduce them. (Source: CNN)
February 27: Slowdown in U.S. Growth Due to Uncertainty Over Trade Tariffs
Economic growth in the United States slowed to an annual rate of 2.3% in the fourth quarter of 2024, slightly lower than the previous quarter’s 3.1%. Although growth remains above the Federal Reserve’s non-inflationary level of 1.8%, cold winter conditions and concerns over the impact of Trump’s import tariffs have dampened consumer demand and investments.
The tariff measures increase the costs of imported goods, putting pressure on consumer and business confidence and potentially limiting the Federal Reserve’s room for further interest rate cuts. Government spending cuts and unemployment among federal workers also pose risks to economic growth, which is expected to reach 2.8% in 2024, slightly less than the 2.9% in 2023. (Source: Reuters)
February 28: Inflation in the U.S. Slows Slightly, but the Fed Faces a Dilemma Due to Cooling Economy
The U.S. Personal Consumption Expenditures (PCE) price index, a key inflation measure for the Federal Reserve, rose by 0.3% in January, in line with expectations, and showed a slight decline year-over-year to 2.5% inflation. Core inflation, excluding food and energy, also increased by 0.3% month-over-month, with a year-over-year rise of 2.6%. Although inflation is cooling slightly, it remains above the Fed’s target. Economic growth is slowing due in part to bad weather, which has pressured consumer spending. Analysts point to a possible difficult balancing act for the Fed, which on one hand wants to curb inflation, but on the other faces a cooling economy that could lead to stagflation. The Fed is expected to possibly begin cutting rates in June, although the pace remains uncertain. (Source: Reuters)
Conclusion
The American economy is currently walking a tightrope between combating inflation and supporting economic growth. Recent inflation figures offer some hope of cooling, but remain too high to make interest rate cuts a given. At the same time, worsening economic growth—partly caused by uncertainties around trade tariffs and government measures—points to a possible weakening of demand. For the Federal Reserve, this presents a difficult dilemma: easing too quickly could reignite inflation, while waiting too long increases the risk of stagnation. The coming months will be crucial for monetary policy, with June potentially marking a turning point in its course.
