In early April, Trump's reciprocal tariff policy triggered a global asset plunge, but Trump subsequently softened his stance, acknowledging that tariffs "will be significantly reduced" and confirming that Federal Reserve Chairman Powell will continue in his role, alleviating concerns about Fed leadership volatility. After investors were pacified, a new wave of risk appetite emerged, with Bitcoin leading a strong upward trend.
From a data perspective, while U.S. macro economic hard indicators like consumption and employment in April had not yet been substantially impacted, risks were clearly rising: March U.S. non-farm employment added 151,000 (expected 170,000), with unemployment rising to 4.1%, better than expected; however, the Trump administration's "reciprocal tariff" policy in April saw average tax rates surge from 2.4% to 21.4%, causing import commodity price index to rise 18.6% year-on-year. Car tariff pre-purchase surge drove March retail sales to increase 1.4% month-on-month, but actual consumption momentum excluding cars only grew 0.5%, decreasing 0.15 percentage points from February.
This policy-driven short-term consumption overdraft sharply contrasts with the April consumer confidence index's largest decline since 1978: April's University of Michigan Consumer Confidence Index preliminary value was 50.8, significantly below the expected 53.5, with March's value at 57, marking the fourth consecutive monthly decline. April's University of Michigan 1-year inflation expectation preliminary value surged to 6.7%, a new high since November 1981, expected at 5.2%, previous value 5%; 5-year inflation expectation preliminary value at 4.4%, the highest since June 1991, expected at 4.3%, previous value 4.1%. The significant weakening of expectation-type soft indicators reveals various unsustainabilities.
The U.S. economy is facing a stagflation dilemma of "high inflation-low growth-policy conflict", with tariff policy's backlash effects set to accelerate through supply chains, employment markets, and consumer confidence. The International Monetary Fund (IMF) released its latest World Economic Outlook Report, lowering 2025 global economic growth expectations from 3.3% to 2.8%, with U.S. growth expectations halved to 1.8% and Eurozone to 0.7%.
Regarding the Federal Reserve, the PCE inflation rate has been above the 2% target for 14 consecutive months, with April's short-term inflation expectation jumping to 3.8%, a new high since 1982. In this context, the Fed's March 19th meeting decided to maintain the federal funds rate in the 4.25%-4.50% range, clearly caught in a triple dilemma: rate cuts might exacerbate inflation expectations, rate hikes could accelerate economic recession, while maintaining the status quo faces presidential pressure. Fed Chairman Powell stated that policymakers will continue observing economic conditions, especially inflation and growth data, awaiting clearer signals before considering rate adjustments.
As the global monetary policy "anchor", the Fed is experiencing its 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 Fed might transition to a neutral rate more quickly, potentially starting rate cuts in the first half of 2025 (May or June).
Throughout April, U.S. dollar assets were caught between policy uncertainty and economic downturn, especially with extremely pessimistic market sentiment in the first half of the month. On April 3rd, the three major U.S. stock indices experienced a historic plunge, with the Dow Jones Industrial Average dropping 5.50% in a single day, NASDAQ plummeting 5.82%, and S&P 500 falling 5.98%, the largest single-day decline since March 2020. Tech stocks were hit hardest, with Apple, Tesla, and NVIDIA significantly dropping due to supply chain cost increases and export restrictions. Nike dropped 14.44% in a single day due to high tariffs in Vietnam and Indonesia. JPMorgan's economic research director Bruce Kasman even raised the U.S. economic recession probability to 79%, reflecting deep market concerns about the long-term negative impacts of tariff policies.
U.S. stocks showed a significant rebound at month-end. On April 23rd, the S&P 500 rose 9.52% in a single day, with NASDAQ rising 12.16%, creating the second-largest single-day gain in history. This rebound was partially due to market expectations of potential tariff policy adjustments, such as the U.S. Customs and Border Protection announcing tariff exemptions for certain electronic products. Additionally, some tech giants' better-than-expected earnings boosted market confidence, like Google's AI business growth and a $70 billion stock buyback plan.
Although U.S. stocks recovered most of the tariff-related losses by month-end, future Trump policy uncertainties and U.S. economic downturn might create stronger resonance, with stocks potentially being the first to be impacted. Wall Street generally believes this rebound might be just a "technical correction in a bear market". Bank of America strategist Michael Hartnett warned investors to "sell on rallies" due to ongoing policy uncertainty and economic recession risks. Goldman Sachs also noted that if tariff policies are not substantially relaxed, U.S. stocks might face pressure again.
Before the Fed restarts rate cuts to rescue the market and tariff negotiations make substantial progress, the short-term U.S. stock rebound remains overshadowed.
Although also severely impacted by tariffs in April, Bitcoin unexpectedly performed, redefining its position in global assets:
In mid-to-late April, Bitcoin price strongly broke through the $94,000 mark, with a single-day increase of over 3%, creating a new yearly high. This trend synchronized with gold's new high, highlighting its "digital gold" attribute. Unlike U.S. stocks impacted by tariff policies, Bitcoin's volatility significantly decreased during the same period. This stability attracted medium-to-long-term funds to accelerate entry—from April 21st to 23rd, U.S. Bitcoin spot ETF saw net inflows exceeding $900 million for three consecutive days, pushing global cryptocurrency total market value past $3 trillion, reigniting bullish sentiment across the crypto market. Investor confidence reached its highest level in over two months, with U.S. media describing it as an alternative safe-haven option. In this wave of gains, Longing-term holders (LTHs) collectively saw significant wealth growth. According to CryptoQuant data, from April 1st to 23rd, LTHs' realized market value increased from $345 billion to $371 billion, a $26 billion increase, demonstrating that Longing-term holders were rewarded for their persistence.
According to CryptoQuant, Bitcoin experienced over 30% correction from January to early April, aligning with historical market cycle patterns in 2013, 2017, and 2021, typically showing a pullback after reaching new highs, washing out weaker investors before resuming an upward trend. Moreover, Bitcoin's decoupling from traditional markets and investor demand for non-correlated assets (like gold prices rising to a new high of $3,500) enhanced Longing-term holders' confidence in Bitcoin's value storage.
According to Cointelegraph's data, currently, a total of 16.7 million BTCs are in a profitable state across various wallets - a level typically referred to as the "Threshold of Optimism". Historically, similar patterns in 2016, 2020, and early 2024 have led bull markets. When profitable supply consistently remains above this region, it often boosts investor confidence and triggers sustained price momentum, usually driving Bitcoin to new all-time highs within months. After breaking through $90,000, on-chain active addresses surged by 15%, and whale wallets (holding over 1,000 BTCs) reached a four-month high, further verifying the bullish consensus.
Driven by Bitcoin's price surge, the global cryptocurrency total market value exceeded $3 trillion on April 23rd, with Bitcoin's market cap reaching $1.847 trillion, surpassing global tech giants Alphabet (Google) and Amazon, as well as precious metal silver. It became the fifth-largest asset, following gold ($22.344 trillion), Apple ($3.000 trillion), Microsoft ($2.726 trillion), and NVIDIA ($2.412 trillion).
This ranking elevation makes Bitcoin the sole digital asset in the global top ten assets. Notably, Bitcoin's long-term correlation with US tech stocks, especially the Nasdaq 100 index, has "decoupled". During April, Bitcoin's price surged 15%, while the Nasdaq 100 index rose only 4.5%, highlighting its independent market performance and changing asset attributes. Compared to stock market volatility from April's tariff policies, Bitcoin recently demonstrated stronger price stability and lower volatility, potentially encouraging more listed companies to consider crypto asset allocation in their financial strategies.
Undoubtedly, crypto assets are rewriting the underlying logic of global asset pricing. In April, ARK Invest founder Cathie Wood significantly raised Bitcoin's 2030 target price from $1.5 million to $2.4 million, based on increasing institutional interest and growing acceptance of Bitcoin as "digital gold".
Currently, April's market rebound represents a temporary elimination of concerns about market collapse and economic recession due to tariffs. Further developments will depend on whether the tariff war can be resolved in time and the trajectory of the US economy. Given that the most optimistic rate cut is expected after January, market disagreements persist, and short-term volatility is inevitable. When traditional financial markets become volatile due to tariff wars and economic cycles, crypto assets' independence and counter-cyclical attributes may attract more funds seeking diversified asset allocation.
