At the beginning of April, Trump's reciprocal tariff policy triggered a global asset crash, but Trump subsequently eased concerns by admitting that tariffs 'would be significantly lowered', and confirmed that Federal Reserve Chairman Powell would continue to serve, easing fears of turmoil in the Federal Reserve's leadership. After reassuring investors, a new wave of risk appetite emerged, with Bitcoin rising strongly.
From the data perspective, although the macroeconomic hard indicators such as U.S. consumption and employment in April have not yet suffered substantial shocks, risks have clearly increased: in March, the U.S. non-farm payrolls increased by 151,000 (expected 170,000), and the unemployment rate rose to 4.1%, with data better than expected; on the other hand, the 'reciprocal tariff' policy implemented by the Trump administration in April saw the average tariff rate soar from 2.4% to 21.4%, leading to an 18.6% year-on-year increase in the import price index. The pre-tariff buying frenzy for cars drove retail sales to spike by 1.4% in March, but the actual consumption momentum excluding cars only grew by 0.5%, down 0.15 percentage points from February.
This policy-driven short-term consumption overextension sharply contrasts with the consumer confidence index in April, which saw its largest decline since 1978: the preliminary value of the University of Michigan's consumer confidence index in April was 50.8, significantly below the expected 53.5, down from 57 in March, marking the fourth consecutive month of decline. The preliminary one-year inflation expectation for April soared to 6.7%, the highest since November 1981, with an expected 5.2% and a previous value of 5%; the preliminary five-year inflation expectation was 4.4%, the highest since June 1991, with an expected 4.3% and a previous value of 4.1%. The significant weakening of expectation-related soft indicators reveals various unsustainabilities.
The U.S. economy is facing a stagflation dilemma of 'high inflation - low growth - policy conflict', with the backlash effect of tariff policies expected to accelerate through three channels: supply chain, labor market, and consumer confidence. The International Monetary Fund (IMF) released the latest issue of its World Economic Outlook report, lowering the global economic growth forecast for 2025 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 exceeded the 2% target for 14 consecutive months, with short-term inflation expectations jumping to 3.8% in April, the highest level since 1982. In this context, the decision to maintain the federal funds rate in the range of 4.25%-4.50% at the Federal Reserve's meeting on March 19 is clearly trapped in a triple dilemma: cutting interest rates may exacerbate inflation expectations, raising rates will accelerate economic recession, while maintaining the status quo faces pressure from the president. Federal Reserve Chairman Powell stated that policymakers will continue to monitor the economic situation, especially inflation and growth data, and will consider adjusting interest rates only after receiving clearer signals.
As a global monetary policy 'anchor point', the Federal Reserve is undergoing the most severe policy imbalance test in nearly 40 years. According to widespread external predictions, in the most optimistic scenario, if inflation declines faster than expected, the Federal Reserve may shift to a neutral interest rate more quickly, even starting to cut interest rates in the first half of 2025 (May or June).
Throughout April, dollar assets faced a double blow from policy uncertainty and economic downturn, especially in the first half of the month when market sentiment was extremely pessimistic; first, on April 3, the three major U.S. stock indices suffered historic declines, with the Dow Jones Industrial Average dropping 5.50% in a single day, the Nasdaq plunging 5.82%, and the S&P 500 falling 5.98%, marking the largest single-day drop since March 2020. Tech stocks were hit hard, with companies like Apple, Tesla, and Nvidia plummeting due to rising supply chain costs and export restrictions, while Nike saw a single-day drop of 14.44% due to high tariffs in Vietnam and Indonesia. Bruce Kasman, chief economist at JPMorgan, even raised the probability of a U.S. recession to 79%, reflecting deep concerns in the market over the long-term negative impacts of tariff policies.
U.S. stocks experienced 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 the U.S. Customs and Border Protection Agency regarding exemptions on certain electronic products. Additionally, the earnings reports of some tech giants exceeded expectations, boosting market confidence, such as Google's AI business growth and a $70 billion stock buyback plan.
Although U.S. stocks recovered most of their tariff-related losses by the end of the month, the uncertainty of Trump's policies and the economic downturn in the U.S. may create a stronger resonance, with U.S. stocks still likely to be the first to suffer. Wall Street generally believes that this rebound may only be a 'technical correction 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 pointed out that if tariff policies are not substantially relaxed, U.S. stocks may face further pressure.
Before the Federal Reserve resumes rate cuts to stimulate the market and negotiations on tariffs make progress, the short-term rebound seen in the U.S. stock market remains clouded.
Although Bitcoin also suffered a heavy blow from tariffs in April, it exceeded market expectations and redefined its position among global assets:
First, in mid to late April, Bitcoin's price strongly broke through the $94,000 mark, with a single-day increase of over 3%, setting a new high for the year. This surge corresponds with gold reaching new highs, underscoring its attribute as 'digital gold'. In contrast to the U.S. stocks, which were impacted by tariff policies during the same period, Bitcoin's volatility significantly decreased in April. This stability attracted medium- and long-term capital to accelerate entry — from April 21 to 23, the net inflow into U.S. Bitcoin spot ETFs exceeded $900 million over three consecutive days, pushing the total market capitalization of cryptocurrencies to surpass $3 trillion and reigniting bullish sentiment across the entire cryptocurrency market, with investor confidence reaching its highest level in over two months. U.S. media referred to it as an alternative choice seeking a safe haven. During this wave of gains, the wealth of long-term holders (LTHs) significantly increased. According to CryptoQuant data, from April 1 to 23, the market value of long-term holders grew from $345 billion to $371 billion, an increase of $26 billion, indicating that long-term holders are receiving returns for their persistence.
According to CryptoQuant statistics, Bitcoin experienced a retracement of over 30% from January to early April, which aligns with historical market cycle patterns from 2013, 2017, and 2021, typically showing a pullback after reaching new highs to wash out weaker investors before resuming an upward trend. Additionally, the decoupling of Bitcoin from traditional markets and investors' demand for uncorrelated assets (such as gold prices rising to a new high of $3,500) has enhanced long-term holders' confidence in Bitcoin as a store of value.
Data from Cointelegraph shows that currently, 16.7 million BTC across various wallets are in profit — this level is commonly referred to as the 'threshold of optimism'. Historically, similar patterns in 2016, 2020, and early 2024 have led to bull markets. When the supply of profitable holdings remains above this level, it often boosts investor confidence and triggers sustained price momentum, usually pushing Bitcoin to set new historical highs within months. After breaking through $90,000, the number of active addresses on the chain 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 funds.
Driven by the surge in Bitcoin prices, the total market capitalization of cryptocurrencies surpassed $3 trillion on April 23, with Bitcoin's market capitalization reaching $1.847 trillion, surpassing Alphabet (Google) and Amazon, two global tech giants, as well as precious metal silver, making it the fifth-largest asset after gold ($22.344 trillion), Apple ($3.000 trillion), Microsoft ($2.726 trillion), and Nvidia ($2.412 trillion).
This improvement in ranking makes Bitcoin the only digital asset on the list of the top ten global assets. Notably, Bitcoin's long-term correlation with U.S. tech stocks (especially the Nasdaq 100 index) has shown signs of '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 asset attribute changes. Compared to the stock market fluctuations caused by tariff policies in April, Bitcoin has recently demonstrated stronger price stability and lower volatility, which may drive more listed companies to consider allocating crypto assets in their financial strategies.
There is no doubt that crypto assets are rewriting the underlying logic of global asset pricing. In April, ARK Invest founder Cathie Wood significantly raised the target price for Bitcoin in 2030 from $1.5 million to $2.4 million, based on increased institutional interest and the growing acceptance of Bitcoin as 'digital gold'.
Currently, the market rebound in April is a temporary alleviation of the doubts surrounding the market collapse and economic recession triggered by tariffs; the further trajectory will depend on whether the tariff war can be concluded in a timely manner and the direction of the U.S. economy. Given that the most optimistic rate cuts will also come after January, market divergences remain, and short-term fluctuations are inevitable. As traditional financial markets face turbulence from tariff wars and economic cycles, the independence and counter-cyclicality of crypto assets may attract more capital seeking diversified asset allocations.