even as the global trade war continues 04/09/2025 09:25
Crypto and stock traders hope for a last-minute solution that could prevent the U.S. from imposing a 104% tariff on imported Chinese goods, but at a press conference, the White House confirmed that the tariffs would take effect on April 9.
The market worsened as Peter Navarro, President Donald Trump’s trade advisor, stated that tariffs “are not a negotiation.”
As a result, the S&P 500 index closed on April 8 down 1.6%, reversing a previous 4% gain. This downturn has traders wondering whether Bitcoin can regain its upward momentum amidst deteriorating macroeconomic conditions.
The U.S. public debt issues persist, paving the way for the rise of Bitcoin.
From April 2 to April 7, the S&P 500 index plummeted by 14.7%, causing panic among Bitcoin holders and forcing the asset to retest the $75,000 level – the lowest in over 5 months.
In an appearance with Israeli Prime Minister Benjamin Netanyahu on April 7, President Trump was reported to have said that his goal is to “reset the trade chessboard.”
Trump added that: “there may be permanent tariffs and there may also be negotiations because there are things we need beyond tariffs.”
According to Yahoo Finance, amid this instability, IPOs and mergers have been delayed, while leveraged loan transactions and bond sales have been sidelined.
Clearly, the stock market has the potential to recover if the risks of a trade war subside. Economists warn that tariffs could cause inflation and significantly increase the likelihood of an economic recession.
However, assessing the impact on Bitcoin prices remains a challenging task. This is because some investors view the fixed monetary system of crypto as a hedge against the continuous increase in the global fiat money supply.
Short-term correlations harm BTC, but the possibility of interest rate cuts could reverse the situation.
In the short term, the positive correlation between Bitcoin and the stock market is expected to continue. However, the financial challenges of the U.S. government create potential opportunities for Bitcoin prices to grow.
On April 8, the yield on the U.S. 10-year Treasury bond rose to 4.28%, after falling to 3.90% on April 7. The increase indicates that investors are demanding higher returns to hold these assets.
The rising costs to refinance the $9 trillion of federal government debt maturing in the next 12 months are expected to create financial imbalances and weaken the USD.
The U.S. Dollar Index (DXY) has diverged from U.S. Treasury yields, dropping to 103.0 on April 8 from 104.2 on March 31. This situation could likely support Bitcoin prices. This view was also shared by BlackRock CEO Larry Fink in a letter to investors on March 31.
Michael Gapen, an economist at Morgan Stanley in the U.S., stated in a customer note on April 8 that: “We think that, with the current stance, the Fed should wait and observe longer to make the right decision,” according to CNBC reports.
According to an updated forecast by Morgan Stanley, the U.S. Federal Reserve (Fed) is expected to maintain interest rates at 4.25%-4.50% until March 2026, adding that “only a recession would change the calculus” and “a recession could mean earlier and larger cuts right from the start.”
The momentum of Bitcoin could turn positive as traders realize that the Fed has limited tools to avoid a recession without risking inflation.
Although the exact timing of the upcoming breakout is still uncertain, the prolonged delays in resolving trade war issues could drive investors towards scarce assets like Bitcoin, especially in the context of concerns about the potential depreciation of the USD.
