At the beginning of April, Trump's reciprocal tariff policy triggered a global asset crash, but Trump later softened his stance, acknowledging that tariffs 'would be significantly reduced' and confirming that Federal Reserve Chairman Powell would continue to serve, alleviating concerns about turmoil in the Fed's leadership. After calming investors, a new wave of risk appetite emerged, with Bitcoin rising sharply.
From the data perspective, while macroeconomic hard indicators such as consumption and employment in the U.S. in April have not yet suffered substantial shocks, risks are clearly rising: in March, the U.S. non-farm payrolls added 151,000 jobs (expected 170,000), and the unemployment rate rose to 4.1%, with data better than expected; however, on the other hand, the 'reciprocal tariff' policy implemented by the Trump administration in April saw the average tariff rate surge from 2.4% to 21.4%, causing the import goods price index to rise by 18.6% year-on-year. The pre-tariff buying spree for cars drove a 1.4% month-on-month surge in March retail sales, but the actual consumption momentum excluding automobiles only grew by 0.5%, down 0.15 percentage points from February.
This policy-driven short-term consumption overdraw stands in stark contrast to the largest decline in the consumer confidence index since 1978: the preliminary value of the University of Michigan consumer confidence index in April was 50.8, significantly below the expected 53.5, down from March's 57, marking the fourth consecutive month of decline. The preliminary value of the University of Michigan's one-year inflation expectations surged to 6.7%, the highest since November 1981, with an expectation of 5.2%, down from a previous 5%; the five-year inflation expectations preliminary value was 4.4%, the highest level since June 1991, with an expectation of 4.3%, down from a previous 4.1%. The significant weakening of expectation-related soft indicators reveals various unsustainable factors.
The U.S. economy is facing a stagflation dilemma of 'high inflation - low growth - policy conflict', and the counterproductive effect of tariff policies will become apparent through the triple channels of the supply chain, labor market, and consumer confidence. The International Monetary Fund (IMF) has released its latest World Economic Outlook report, downgrading the 2025 global economic growth forecast from 3.3% to 2.8%, with the U.S. growth forecast halved to 1.8% and the Eurozone down to 0.7%.
Looking at the Federal Reserve, the PCE inflation rate has been above the 2% target for 14 consecutive months, and in April, short-term inflation expectations jumped to 3.8%, the highest since 1982. In this context, the Federal Reserve's decision to keep the federal funds rate unchanged in the range of 4.25% - 4.50% during the March 19 meeting clearly reflects a triple dilemma: cutting rates could exacerbate inflation expectations, raising rates would accelerate economic recession, while maintaining the status quo faces presidential pressure. Federal Reserve Chairman Powell stated that policymakers will continue to monitor economic conditions, especially inflation and growth data, and will consider adjusting interest rates only after more clear signals.
As the 'anchor point' of global monetary policy, the Federal Reserve is undergoing the most severe policy imbalance test in nearly forty years. According to widespread predictions, in the most optimistic scenario, if inflation declines faster than expected, the Federal Reserve may shift to a neutral interest rate more quickly, potentially beginning rate cuts in the first half of 2025 (May or June).
Throughout April, dollar-denominated assets faced dual blows from policy uncertainty and economic downturn, especially in the first half of the month where market sentiment was extremely pessimistic; on April 3, the three major U.S. stock indices experienced historic declines, with the Dow Jones Industrial Average dropping 5.50% in a single day, the Nasdaq index plummeting 5.82%, and the S&P 500 index falling 5.98%, marking the largest single-day drop since March 2020. Technology stocks were hit hard, with companies like Apple, Tesla, and Nvidia experiencing significant declines due to rising supply chain costs and export restrictions, while Nike plunged 14.44% in a single day due to high tariffs affecting Vietnam and Indonesia. Bruce Kasman, chief economist at JPMorgan, even raised the probability of a U.S. recession to 79%, reflecting deep market concerns about the long-term negative impact of tariff policies.
U.S. stocks saw a significant rebound at the end of the month. On April 23, the S&P 500 index rose 9.52% in a single day, and the Nasdaq index increased by 12.16%, marking the second-largest single-day gain in history. This rebound was partly due to market expectations of possible adjustments to tariff policies, such as the announcement by U.S. Customs and Border Protection to exempt tariffs on certain electronic products. Additionally, the earnings reports of some tech giants exceeded expectations, such as Google's AI business growth and a $70 billion stock buyback plan, which boosted market confidence.
Although U.S. stocks recovered most of their tariff-driven losses by the end of the month, the uncertainty surrounding Trump's policies and the U.S. economic downturn may create a stronger resonance, leaving U.S. stocks still vulnerable. Wall Street generally believes that this rebound may merely be a 'technical repair in a bear market.' Bank of America strategist Michael Hartnett warned that investors should 'sell on rallies' as the market still faces policy uncertainty and recession risks. Goldman Sachs also noted that if tariff policies are not relaxed substantively, U.S. stocks may come under pressure again.
Before the Federal Reserve resumes rate cuts and significant progress is made in tariff negotiations, any short-term rebound in U.S. stocks remains overshadowed by uncertainty.
Although Bitcoin was also hit hard by tariffs in April, it outperformed market expectations and redefined its position among global assets:
Firstly, in mid to late April, Bitcoin's price strongly broke through the $94,000 mark, with a single-day increase exceeding 3%, setting a new high for the year. This rise corresponds with gold reaching new highs, underscoring its attributes as 'digital gold'. Additionally, in stark contrast to the U.S. stocks impacted by tariff policies during the same period, Bitcoin's volatility significantly decreased in April. This stability attracted medium- to long-term funds to enter the market rapidly—from April 21 to 23, the net inflow into U.S. Bitcoin spot ETFs exceeded $900 million for three consecutive days, pushing the total market capitalization of global cryptocurrencies past $3 trillion, reigniting bullish sentiment in the entire cryptocurrency market, with investor confidence rising to its highest level in over two months. U.S. media dubbed it an alternative choice in search of a safe haven. In this wave of appreciation, the wealth of long-term holders significantly grew. According to CryptoQuant data, from April 1 to 23, the market value of long-term holders increased from $34.5 billion to $37.1 billion, an increase of $2.6 billion, indicating that long-term holders are reaping the rewards of their persistence.
According to CryptoQuant statistics, Bitcoin experienced a correction of over 30% from January to early April, which aligns with historical market cycle patterns from 2013, 2017, and 2021, where corrections typically occur after reaching new highs, flushing out weaker investors before resuming an upward trend. Additionally, the decoupling of Bitcoin from traditional markets and the increased demand for non-correlated assets (such as gold prices rising to new highs of $3,500) have bolstered long-term holders' confidence in Bitcoin as a store of value.
Data from Cointelegraph indicates that currently, 16.7 million BTC across various wallets are in profit—this level is often referred to as the 'threshold of optimism'. Historically, similar patterns in 2016, 2020, and early 2024 have led bull markets. When the profit supply remains above this area, it typically boosts investor confidence and triggers sustained price momentum, often pushing Bitcoin to new historical highs within a few months. After breaking the $90,000 mark, the number of on-chain active addresses surged by 15%, and the number of whale wallets (holding over 1,000 BTC) reached a four-month high, further validating the bullish consensus of capital.
Driven by the surge in Bitcoin prices, the global cryptocurrency market capitalization surpassed $3 trillion on April 23, with Bitcoin's market value reaching $1.847 trillion, exceeding two major global tech giants, Alphabet (Google) and Amazon, as well as the precious metal silver, becoming the fifth-largest asset, after gold ($22.344 trillion), Apple ($3.000 trillion), Microsoft ($2.726 trillion), and Nvidia ($2.412 trillion).
This ranking improvement has made Bitcoin the only digital asset on the list of the world's top ten assets. Notably, Bitcoin's long-term correlation with U.S. tech stocks (especially the Nasdaq 100 index) has shown a 'decoupling'. During April, Bitcoin's price surged by 15%, while the Nasdaq 100 index only rose by 4.5%, highlighting its independent market performance and changes in asset characteristics. Compared to the stock market volatility caused by tariff policies in April, Bitcoin has recently shown stronger price stability and lower volatility, which may encourage more publicly traded companies to consider allocating cryptocurrency assets in their financial strategies.
Without a doubt, crypto assets are rewriting the underlying logic of global asset pricing. In April, ARK Invest founder Cathie Wood raised her Bitcoin price target for 2030 from $1.5 million to $2.4 million, citing increased institutional interest and the growing acceptance of Bitcoin as 'digital gold'.
Currently, the market rebound in April appears to be a temporary alleviation of concerns over the market collapse and economic recession triggered by tariffs; the further trajectory will depend on whether the trade war can be resolved promptly and the performance of the U.S. economy. Given that the most optimistic rate cuts are still months away, market divergences persist, and short-term volatility is inevitable. When traditional financial markets are shaken by trade wars and economic cycles, the independence and countercyclical properties of crypto assets may attract more funds seeking diversified asset allocation.
