In March, the global market was deeply mired in policy uncertainty, eagerly searching for a new anchor point. U.S. stocks accelerated valuation reconstruction, and the crypto market was inevitably affected by the situation. With the new tariff bomb dropped on April 2, the global trade order faces deep restructuring, and economic policies of various countries are forced to make emergency adjustments. The more critical it is at such times, the more important it is to patiently wait. As the new order is gradually reshaped, market sentiment will also warm up.
Trump's Tariff Policyhas undergone multiple adjustments in the just-passedMarch, and on April 2, the Trump administration officially announced the implementation of a "comprehensive reciprocal tariff" policy—imposing a basic tariff of at least 10% on all goods exported to the United States, and levying additional taxes on about 60 countries with significant trade deficits (such as 34% for China, 46% for Vietnam, 49% for Cambodia)—bringing the most intense wave of global trade order restructuring since World War II.
As soon as the news was announced, the market experienced violent fluctuations. U.S. stocks and the U.S. dollar jointly plummeted, with the dollar index falling below 104;Nasdaq futures plunged over 4%, and S&P 500 futures dropped 3.5%. The stocks of the 7 major U.S. tech giants were particularly notable, with Apple's after-hours stock falling 7.5%.Funds frantically rushed into safe-haven assets, with spot gold prices soaring and breaking through 3160 dollars per ounce, hitting a new historical high.
The tariff rate and scope this time far exceed Wall Street's previous estimates.Investors are worried that the tariff war will ultimately impact the foundation of U.S. economic growth.First is the risk of supply chain disruption. Targeted tariffs on automobiles, steel and aluminum, and tech products (with some rates reaching 25%-50%) force companies to accelerate regional supply chain restructuring, causing a sharp increase in industrial chain costs. Second is the hidden concern of inflation spiral. According to JPMorgan Chase's calculations, after adding countermeasures, the U.S. CPI could be pushed up by 2-2.8 percentage points.
U.S. Consumer Confidence Index (Source: investing.com)
Moody's chief economist Mark Zandi dramatically increased the possibility of a U.S. economic recession this year from 15% at the beginning of the year to 40%, and Goldman Sachs' economic team also raised the probability of a 12-month economic recession to 35%.In March, some U.S. economic indicators showed a decline. Although the non-farm data at the end of March showed the current U.S. unemployment rate of 4.1%, the March consumer confidence index final value dropped from 64.7 in February to 57, lower than economists' median estimate, while the core PCE price index year-on-year remained at 2.8%, confirming the dilemma of "slowing economic growth and stubborn inflation".
The Federal Reserve expressed concern about economic uncertainty at its March monetary policy meeting. On one hand, economic growth shows a slowdown, with the 2025 GDP expectation reduced from 2.1% to 1.7%; on the other hand, inflation remains highly sticky. In this situation, choosing to cut rates might further stimulate price increases, while maintaining high interest rates would increase corporate debt pressure, putting the Federal Reserve, standing in the triple storm of inflation, politics, and globalization, in a dilemma where any move is problematic. Therefore, we saw thatin March, the Federal Reserve decided to keep the interest rate unchanged at 5.5%.
After the new tariff policy was announced on April 2, traders increased their bets that the Federal Reserve would start cutting rates in June and accumulate three 25 basis point cuts (0.75 percentage points) before October. According to Reuters, the probability of the Federal Reserve cutting rates at the June meeting has risen to about 70%, compared to about 60% before the tariff announcement.
Meanwhile, the impact of the tariff policy extends far beyond the U.S. domestic economy and Federal Reserve monetary policy. Trump's "reciprocal tariff" plan aims to increase fiscal revenue through tariffs and use this as a bargaining chip to force other countries to lower tariffs or make other policy changes. Are other countries willing to cooperate in negotiations? How much compromise can Trump make in negotiations? Currently, major economies worldwide are developing countermeasure lists, and some analysts believe that global trade friction is evolving from "point conflicts" to "systematic confrontation". The global economy and financial markets will continue to bear pressure in this uncertainty.
(Source: https://www.nasdaq.com/)
U.S. stocks continued to decline in March, causing the S&P 500 and Nasdaq to end the first quarter of 2025 with declines of 8.7% and 12.3%, creating the largest quarterly drop since 2022.Looking at a longer timeline, since Trump was elected U.S. President in November 2024, the S&P 500 index has fallen from 6200 points to 5572 points, a drop of over 10%, with $4 trillion evaporating from its peak.
(Source: New York Times/Karl Russell)
Over the past two years, U.S. stocks have attracted global funds due to "TINA" (There Is No Alternative to equities), accounting for over 50% of global market capitalization. During market prosperity, investors' optimism continuously pushed up stock prices, overlooking potential risks. However, as the economic cycle evolves, this valuation disconnected from fundamentals becomes increasingly difficult to maintain, and institutional optimism about U.S. stocks is being corrected: Goldman Sachs lowered the S&P 500 year-end target from 6,500 to 6,200 points, citing "tariff risks and slowing earnings growth"; Morgan Stanley warned that 5,500 points might be the starting point of a technical rebound, but requires corporate earnings to bottom out and support. Meanwhile, the confusion of U.S. policy signals further intensified market panic. The "big 7" (Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, Tesla) were the first to experience a selling wave, with Tesla dropping nearly 36% and NVIDIA falling nearly 20% in the first quarter. By the end of March, the S&P 500 rebounded to 5,767 points, reflecting market expectations of policy "softening". However, these optimistic expectations ultimately fell through. Notably, under the dynamic interaction of interest rate cut expectations, tariff intensity, and recession risks, some institutions have clearly pointed out that the risk-reward ratio of one-sided bets on U.S. stocks has significantly deteriorated. BTC experienced significant market volatility but remained relatively resilient: after severe fluctuations in late February, BTC did not experience a unilateral decline in March but showed a "V-shaped" oscillation. Its monthly decline narrowed to 2.09%, significantly outperforming the Nasdaq's 8.2% decline. Particularly in mid-to-late March, with the SEC's abolishment of SAB 121, institutional increases by BlackRock, and the Federal Reserve's signal of three potential rate cuts this year, BTC saw a strong rebound. The U.S. government's recognition and regulatory progress in the crypto asset field are becoming increasingly clear. On March 6th, Trump signed an executive order establishing a "Strategic Bitcoin Reserve" (SBR), incorporating approximately 200,000 BTC previously seized by the federal government, with a clear commitment not to sell within four years. The SEC is gradually relaxing its historically strict stance on cryptocurrencies, planning multiple roundtable conferences about trading, custody, tokenization, and DeFi, signaling a shift from "enforcement-focused" to "cooperation and rule-making".
BlackRock CEO Fink's Annual Investor Letter (Source: https://www.blackrock.com/corporate/investor-relations/larry-fink-annual-chairmans-letter)
Institutional investors' enthusiasm for crypto assets, especially BTC, continues to rise. On March 31, Larry Fink, CEO of BlackRock, the world's top asset management company, released a 27-page annual letter to investors. In the letter, Fink issued a warning in an unusually serious tone: if the United States fails to effectively control its rapidly expanding debt and fiscal deficit, the US dollar's decades-long position as the "global reserve currency" could potentially be replaced by emerging digital assets like BTC.
It is worth noting that Fink mentioned BTC seven times and the US dollar eight times in the letter, highlighting BTC's importance in the current financial context and hinting at its potential key role in the evolution of the global economic landscape.
With the implementation of Trump's tariff policy on April 2, the US economic prospects become increasingly uncertain. If the US economy does not fall into a deep recession under the tariff policy and the Federal Reserve cuts interest rates in June, BTC may usher in a trend reversal in the second quarter. During economically unstable periods, BTC's scarcity and hedging properties will become more prominent. Once market risk appetite recovers, BTC, as an emerging asset class, meets the potential market demand for new hedging and value storage methods, and is expected to break through key resistance levels and undergo a value reassessment.
In March, the market oscillated between "stagflation concerns" and "policy mitigation". In the long term, if tariffs drive up inflation and erode US dollar credit, it will force capital to turn to non-sovereign assets. BlackRock CEO Fink's question in the investor letter, "Will BTC shake the US dollar hegemony?" is not without reason. He reminds us that the most disruptive variable in reshaping the new global financial order has already emerged.
