Trump Tips His Hat to Inflation While Crypto Tries to Find the Exit 🪩

Former U.S. President Donald Trump told CNBC on Friday that he "loves the inflation" and would support the Federal Reserve cutting interest rates if Chair Jerome Powell chooses to do so. The remarks came as Bitcoin (BTC) and the broader crypto market extended their decline, with traders weighing escalating geopolitical tensions across the Middle East.

Bitcoin slipped to around $78,500 on Friday, down roughly 11% over the past week, according to CoinGecko data. Ethereum (ETH) traded near $2,090, a 15% weekly drop, while the total crypto market capitalization fell about 10% to roughly $2.5 trillion. Liquidations across the derivatives market exceeded $1.1 billion in 24 hours, per CoinGlass, as leveraged long positions were flushed out.

Investors attributed the sell-off to a combination of U.S. strikes on Iranian nuclear facilities and a subsequent Iranian parliamentary vote to close the Strait of Hormuz, a corridor that handles about 20% of global oil shipments. The geopolitical shock sent Brent crude up 3.5% to $91.20, stoking fears of a renewed inflation pulse just as the Fed's preferred PCE gauge already sits at 2.6% year-over-year, above the 2% target.

Trump's comments appeared to signal openness to monetary easing. "I love the inflation," he said, adding that lower rates would make government debt servicing more manageable. Powell, speaking earlier this week at the European Central Bank forum in Sintra, declined to commit to a July cut, stating that policymakers need "more good data" before adjusting policy.

Crypto market sentiment, tracked by the Fear and Greed Index, fell to 23 on Friday, indicating "extreme fear" — its lowest reading since March. Spot Bitcoin ETFs recorded $312 million in net outflows on Thursday, the second-largest daily outflow since launch, according to Farside Investors data. Funding rates on perpetual futures flipped negative across major exchanges, a sign that short positions are dominating.

Analysts at QCP Capital wrote in a Friday note that geopolitical risk premia are now being "directly priced into crypto" and that BTC's next major support sits at the $72,000–$74,000 range, where the asset consolidated between January and March. Options data from Deribit shows implied volatility on 30-day BTC contracts climbing to 58%, up from 42% two weeks ago. With the Fed's next policy meeting set for July 30, traders are now pricing a 68% probability of a 25-basis-point cut, per CME FedWatch.