Today, global stock markets experienced severe fluctuations, and investor sentiment became unusually tense. The U.S. stock market, in particular, saw a significant drop, with the Dow Jones Industrial Average plunging over 2,200 points at one point, and the S&P 500 and Nasdaq Composite Index also suffered heavy losses, both dropping nearly 6%. At the same time, Chinese and Asian stock markets also experienced substantial declines, with the Hong Kong Hang Seng Index falling more than 9% and the China CSI 300 Index dropping over 5%.
In addition, cryptocurrencies such as Bitcoin have also not been spared, with the digital asset market liquidating over $1.36 billion. The largest cryptocurrency, BTC, saw its price plummet overnight from $83,000 to $74,000, a drop of over 30% from its historic peak of $109,588 three months ago.
The direct cause of this wave of market turbulence mainly stems from intensified Sino-U.S. trade tensions and worries about a global economic recession, particularly as the new tariff policy implemented by the Trump administration has triggered market panic. In response, writer and financial commentator Holger Zchaepitz sarcastically remarked: "The tariffs announced by Trump have evaporated $8.2 trillion in stock market value—more than the losses in the worst week of the 2008 financial crisis."
Furthermore, members of the Trump administration have openly stated that the issue of tariff escalation will not be resolved quickly, and it cannot be negotiated in a matter of days or weeks. The current market collapse is part of a structural shift in the U.S. aimed at compensating for losses caused by years of imbalanced trade practices. Additionally, President Trump commented on market sell-offs, saying, "Sometimes you have to take medicine to solve the problem, just hold on," reinforcing the view that tariffs and their effects will persist.
This series of upheavals has not only made investors uneasy but has also sparked heated discussions about the Federal Reserve's monetary policy. President Trump has urged the Fed to quickly lower interest rates to stimulate the economy, while Fed Chairman Powell stated there is no need to rush into action, leading to widespread market attention on the tug-of-war between the two.
In the midst of global financial turmoil, Trump has called for the Federal Reserve to quickly take measures to lower interest rates. He emphasized that the current economic environment has met the conditions for rate cuts, and the decline in energy and food prices should prompt the Fed to adopt a loose policy. This is the "perfect time"; lowering interest rates at this juncture could not only stabilize the stock market but also stimulate economic growth, providing more liquidity for businesses and consumers.
Trump's call is not without merit. In his view, lowering interest rates can reduce borrowing costs, thereby stimulating investment and consumption, further driving economic recovery. However, Powell holds a different view. He pointed out that there is currently no need to rush into lowering interest rates. Despite uncertainties facing the economy, the overall economic situation remains good, with low unemployment and strong consumer spending. The Fed will remain patient and wait for clearer economic data to determine the future direction of monetary policy.
This cautious attitude reflects Powell and the Fed's desire to avoid overreacting to short-term market fluctuations. They are concerned that hasty interest rate cuts could lead to increased inflation, which would have long-term negative impacts on the economy. However, this stance sharply contrasts with the market's strong expectations for rate cuts. Market analysts warn that recent tariff policies may lead to rising inflation, and this impact could be lasting. Without effective policy coordination, the situation may replay the "stagflation" scenario of the 1970s, where economic stagnation, soaring prices, and worsening unemployment occurred simultaneously.
So, when will the Federal Reserve start the money printing machine and implement more monetary easing policies? Analysts believe this will depend on economic data in the coming months, including employment data, inflation levels, and the consumer confidence index. If these data continue to show signs of economic slowdown, the Fed may be forced to take measures such as lowering interest rates or other stimulus actions.
There are also concerns about the U.S. Treasury volatility index (MOVE Index). If this index breaks above 140, the Federal Reserve will have to restart the money printing machine to cope with market panic and economic uncertainty. An increase in the MOVE index typically reflects market expectations for future volatility; if it continues to rise, it indicates growing investor concerns about the economic situation.
Moreover, changes in the global economic landscape will also influence the Federal Reserve's decision-making. Further escalation of the Sino-U.S. trade war and the performance of the European economy could become significant factors affecting the U.S. economy.
Therefore, in the current market environment, the future trajectory of Bitcoin is filled with uncertainty. Although it faces significant downward pressure in the short term, some analysts believe that in the long run, Bitcoin will still be an effective tool against inflation and economic uncertainty. As more institutional investors enter this market, the application scenarios for Bitcoin are also continuously expanding. Investors need to be more cautious during this turbulence, assess their risk tolerance, and pay attention to economic data and policy changes to make informed investment decisions.
Overall, as the global economic environment becomes more complex, investors' expectations for the future have become more cautious. Powell's statements have weakened market expectations for interest rate cuts, but Trump's pressure may prompt the Fed to adopt more aggressive policies. The market is closely monitoring upcoming economic data to assess the direction of the Fed's monetary policy.
