Fears of stagnation in the United States arose with the presence of Bitcoin, the crisis of the Federal Reserve Policy star-news.press/wp

President Trump’s introductory policies create the risk of recession in the American economy. This threatens both traditional markets and cryptocurrencies, as the Federal Reserve faces difficult political options.

It seems that the new US tariff during President Donald Trump reaches its final stage. However, the signs of inflation appear in the American industrial sector.

Economic data shows a warning of stagnation

The Institute of Supply Management reported the disappointing services data on Tuesday. The American Services Directors Index for July 50.1 came below forecast 51.5. While it is still above the expansion mark 50, which means the services sector is expanding, it has decreased 0.7 points from 50.8 June.

In short, the US service economy is still growing, but it is much slower than expected, and it is seriously close to contraction.

The recruitment index decreased to 46.4, a decrease of 0.8 points from the previous month. When this decreases to less than 50, this means that companies cut jobs, and they represent the lowest level since March. On the contrary, the price index jumped 2.4 points to 69.9 – the highest since October 2022. When this exceeds 50, this means that the prices rise quickly.

This mixture creates RecessionWhere there are less functions while prices rise simultaneously. For ordinary people, it is difficult to find work while it costs everything more. Political makers face an impossible choice between combating unemployment and controlling inflation.

For central banks, control of inflation requires an increase in prices, while stimulating discounts in requirements. Both problems cannot be solved at the same time. In stagnation, central banks may struggle to reduce prices decisively.

More signs of stagnation will crush the encryption market

This background was highly weighed on the US financial markets on Tuesday. Dow Jones decreased 61.90 points (0.14 %) to 44,111.74. S&P 500 30.75 points (0.49 %) decreased to 6,299.19. The Nasdaq Stock Exchange rejected 137.03 points (0.65 %) to close at 20,916.55. Bitcoin also decreased by about 1 %.

After the job report in July, expectations of the Federal Reserve policy changed. Markets now expect price cuts this year instead of three. According to the CME group Fedwatch Tool, markets expect 25-basis discounts in September and October.

The possibility between average suspension and reduction in December is only 2 %. However, if the recession signals are strengthened, this gap is likely to widen.

This issue can significantly affect encryption prices. Since Congress approved the Genius Law on July 18, Bitcoin showed increasing sensitivity to economic data. Most altcoins follow bitcoin accordingly.