Bitcoin, crypto market slide as Trump resumes China tariff rhetorics amid in-line PCE data

• The US core PCE data for April fell to 2.5%, in line with expectations, while the annual PCE rate came in at 2.1%, below expectations of 2.2%.
• Trump says China violated its trade agreement with the US.
• Bitcoin and Ethereum are down 1% and 2.5%, respectively, over the past 24 hours amid uncertainty in the macroeconomic outlook.

Bitcoin (BTC) and Ethereum (ETH) dropped 1% and 2.5%, respectively, on Friday following President Donald Trump's statement that China violated its trade agreement with the United States (US). This comes amid the release of the US Personal Consumption Expenditure (PCE) data, which came in line with expectations.

Bitcoin, Ethereum fail to recover despite in-line PCE data; Trump sparks weekend tariff fears again

The US core PCE data for April came in line with expectations at 2.5% YoY, its lowest level since March 2021, dropping from 2.7% the previous month. The overall annual PCE fell 2.1%, below expectations of 2.2%. On a monthly basis, both core and overall PCE rose by 0.1%.

The PCE is the Federal Reserve's (Fed) preferred tool for measuring inflation. Market participants suggest that the Fed could maintain a wait-and-see approach to cutting rates, considering the PCE came in line with market expectations.

The crypto market initially held steady following the in-line PCE data but plunged quickly after signs of another weekend tariff uncertainty from Trump emerged, a trend that has been developing since the weekend tariff announcement on Canada and Mexico in February.

The decline was fueled by a post from President Donald Trump stating that China violated its trade agreement with the US. Trump shared on Truth Social that his 145% tariffs imposed on China were devastating and put them in "grave economic danger." He said that the effects on China caused him to make a "fast deal" to prevent civil unrest in the country, which quickly stabilized China's economy.

"The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!," wrote Trump.

Following the post from President Trump, speculations that the US is planning wider China tech sanctions dealt a further blow to risk sentiment, according to Bloomberg.

This caused a wider shaking across crypto assets, with Bitcoin plummeting below $105,000 for the first time since May 20, down 1% on the day and 3.7% on the weekly timeframe. Likewise, top altcoins Ethereum, XRP and Solana also declined by 4%, 4.8% and 5.8%, respectively, over the past 24 hours.

Several crypto sectors followed the downtrend, signaling investors may be anticipating another weekend dump.

The meme coin sector took a double-digit dive following the announcement, with top tokens Dogecoin (DOGE), Shiba Inu (SHIB), PEPE and Official Trump (TRUMP) declining by 8%, 6%, 6% and 6%, respectively.

The Artificial intelligence (AI) sector also took a hit, declining nearly 10%, with top tokens Bittensor (TAO), Near Protocol (NEAR), Internet Computer (ICP), Artificial Superintelligence (FET) and Render (RENDER) dropping between 5% and 9%. 

Notably, the crypto market's reactions to tariff announcements in recent weeks have been less devastating compared to the sharp declines that occurred between February and April. This signals that market participants are becoming accustomed to the back and forth in Trump's tariff rhetoric, even though it still casts a shadow of uncertainty over the market.