What to knowBitcoin swung between $65,900 and $67,000 as markets reacted to fresh tariff rhetoric from Donald Trump.Traders are less focused on the accuracy of the trade deficit claim and more on what renewed tariff talk implies for inflation, interest rates, and the U.S. dollar.Bitcoin is increasingly trading as a macro liquidity proxy, leaving rallies vulnerable if “higher-for-longer” rate expectations firm up.Bitcoin pared losses and rebounded toward $67,000 on Thursday after briefly dipping near $65,900, as traders digested comments from former U.S. President Donald Trump claiming tariffs have slashed the U.S. trade deficit by 78%.In a post on Truth Social late Wednesday, Trump said the deficit could even turn positive later this year. For crypto markets, however, the significance lies less in the precise figures and more in what renewed tariff rhetoric could mean for inflation dynamics and monetary policy.Tariffs, Inflation, and “Higher-for-Longer” RatesTariffs effectively act as a tax on imports, which can push prices higher in the real economy. That, in turn, risks complicating the Federal Reserve’s path toward rate cuts.When markets begin to price interest rates staying higher for longer, the typical chain reaction is:A stronger U.S. dollarTighter global financial conditionsReduced appetite for risk assets, including cryptocurrenciesThis dynamic helps explain why Bitcoin has been volatile even in the absence of any crypto-specific catalyst.Bitcoin Trades Like a Macro Asset AgainOver the past two weeks, Bitcoin has increasingly behaved like a macro-sensitive asset, moving in step with shifts in liquidity, rate expectations, and dollar strength rather than internal crypto narratives.There is also a data backdrop reinforcing why trade is back in focus. In early January, the U.S. trade deficit narrowed sharply to about $29.4 billion, the lowest level since 2009. Analysts attributed the move to falling imports, stronger exports, and the impact of tariff threats.However, economists cautioned that non-monetary gold flows exaggerated the improvement, making month-to-month figures look stronger than the underlying trend.What Comes Next for Bitcoin?If tariff rhetoric translates into persistently tighter financial conditions, Bitcoin may struggle to sustain upside momentum.If it fades into political noise, markets are likely to refocus on flows, leverage, and whether buyers can reclaim key technical levels.For now, Bitcoin’s ability to hold rallies appears closely tied to macro signals — especially anything that shifts expectations around inflation, rates, and dollar liquidity.
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