Bitcoin and major altcoins have managed to hold their ground following former President Donald Trump’s surprise “Liberation Day” tariffs announcement. While traditional stock markets plunged into correction territory, digital assets like Bitcoin and Ethereum showed relative resilience—at least for now.
Crypto Outperforms Amid Market Chaos
Bitcoin (BTC) remained firm within the $80,000 to $90,000 range, last trading at approximately $83,435. Ethereum (ETH) hovered just below the $2,000 mark. The broader cryptocurrency market saw a modest dip, with total market capitalization falling from $2.7 trillion to $2.6 trillion.
In sharp contrast, Wall Street suffered its worst weekly loss since the pandemic crash of 2020. The Nasdaq 100, S&P 500, and Dow Jones Industrial Average all entered correction territory, highlighting the deep unease across financial markets.
Federal Reserve Sounds the Alarm on Stagflation
A potential game-changer arrived Friday when Federal Reserve Chairman Jerome Powell issued a stern warning: Trump’s tariffs could trigger stagflation—an economic nightmare defined by simultaneous high inflation and low growth.
“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said.
The Fed’s hawkish stance could weigh heavily on crypto and equities alike. Investors typically flee riskier assets when interest rates remain high for extended periods. Historically, Bitcoin and stocks have rallied when the Fed moves to cut rates.
Powell’s message was echoed by other central bank officials, including Raphael Bostic and Adriana Kugler, who also favor keeping rates elevated to tackle inflation. Former President Trump, on the other hand, called for immediate rate cuts, accusing Powell of “playing politics.”
Recession Fears Mount, Markets Send Mixed Signals
While the Fed signals caution, various market indicators are pointing toward an impending recession. Crude oil prices plunged this week—Brent crude dropped to $64, while WTI hit $62—signaling declining demand. Copper, another economic bellwether, also tumbled sharply.
Bond markets are echoing the warning signs. The 10-year Treasury yield fell to 3.95%, and the 2-year to 3.5%, signaling investor expectations of a slowdown.
Goldman Sachs joined the chorus of concern, raising the probability of a U.S. recession and forecasting at least three rate cuts later in 2025. If those cuts materialize, it could provide the much-needed tailwind for Bitcoin and altcoins to rally once more.
What’s Next for Crypto?
While crypto assets currently appear resilient, the Federal Reserve’s path forward will be critical. A hawkish Fed may put further pressure on digital assets. On the flip side, any pivot toward rate cuts could fuel a powerful rebound in crypto markets—just as it did in 2020 during the pandemic and in the aftermath of the Global Financial Crisis.
In the meantime, investors will continue watching the Fed, inflation metrics, and global macro indicators for clues on what’s next.
