Prediction markets and Wall Street brace for potential Fed intervention as tariffs mount and recession risks rise. Will crypto benefit from another round of easy money?
Markets Brace for Emergency Fed Rate Cut
The odds of an emergency interest rate cut by the Federal Reserve are climbing rapidly as Donald Trump’s intensifying trade war sends shockwaves through global markets. According to decentralized prediction platform Polymarket, the probability of an emergency cut has surged to 31%, more than doubling from 15% on April 1. On regulated prediction market Kalshi, odds have risen to 41% — the highest since November 2024.
With the U.S. imposing a 104% tariff on all Chinese goods, analysts are scrambling to revise their economic forecasts. The sweeping trade measure targets approximately $432 billion in Chinese exports to the U.S., representing a significant chunk of the $582 billion annual trade volume between the two nations.
The ripple effects are already visible. The U.S. has extended its tariff strategy to other key partners including the EU, Japan, South Korea, and Vietnam, compounding pressure on supply chains and inflation.
“We are green lit for Fed intervention.”
Arthur Hayes (@CryptoHayes), April 9, 2025
Wall Street Turns Bearish on the Economy
Leading financial institutions like JPMorgan, Goldman Sachs, and BlackRock have all raised their recession risk outlooks, citing the compounded effects of trade tensions, inflationary pressure, and slowing corporate earnings. Many now believe the Fed may be forced to act ahead of schedule to ease financial stress and restore confidence.
Markets are signaling distress. U.S. stock indices including the Dow Jones, S&P 500, and Nasdaq 100 have all tumbled over 20% from their 2024 highs, officially entering bear market territory.
Crypto Prices Crash — But a Rebound May Be in Sight
The downturn has extended to digital assets. Bitcoin (BTC), Cardano (ADA), and Ripple’s XRP have seen double-digit losses this year amid the broader selloff. Bitcoin has dropped from its January peak of over $100,000 to below $76,000. Cardano and XRP have each fallen more than 35%, reflecting deteriorating investor sentiment.
However, history suggests a potential reversal could be on the horizon.
During the March 2020 pandemic panic, emergency rate cuts and aggressive monetary stimulus triggered a massive rally in crypto. Bitcoin surged from below $4,000 to over $69,000 in just 12 months. Cardano climbed from $0.03 to $3, and XRP went from $0.12 to nearly $2, as liquidity flooded the system.
Trump Floats Fiscal Stimulus
The Trump administration may also roll out fiscal stimulus to cushion the blow from tariffs. According to The Wall Street Journal, proposals under discussion include bailouts for U.S. farmers and tax credits for exporters measures that could complement monetary policy and help stabilize the economy.
This combination of monetary easing and fiscal support could provide a crucial tailwind for high-risk assets like cryptocurrencies.
Final Thoughts
As prediction markets anticipate a potential emergency Fed rate cut, the stage may be set for another wave of crypto gains. While Bitcoin, Cardano, and XRP remain under pressure in the short term, history shows that aggressive monetary policy can act as a powerful catalyst for recovery.
If the Fed moves swiftly and fiscal stimulus follows, crypto markets could be poised for a rebound making the coming weeks critical for traders and investors alike.
