Donald Trump’s Liberation Day announcement on sweeping new tariffs sent shockwaves across global financial markets. Investors scrambled to adjust their portfolios, and the effects became visible almost instantly. Stocks sank across the board, marking the worst week since the 2020 pandemic crash. Yet, while traditional markets suffered, Bitcoin and several altcoins held their ground — some even posted modest gains. Bitcoin remained resilient, trading between $80,000 and $90,000, even as the broader crypto market saw a slight dip in total capitalization. Ethereum, however, stayed slightly under $2,000, unable to break out of its recent range. Despite this, crypto assets managed to outperform the S&P 500, Dow Jones, and Nasdaq 100 during one of the most volatile weeks in recent history.
Liberation Day Tariffs Spark Market Volatility
Trump’s new tariffs, aimed at protecting American industries, triggered fears of a renewed global trade war. Analysts began pricing in the risk of inflation and lower global growth, and investors quickly exited risk assets. The Dow Jones dropped more than 7%, the S&P 500 fell over 6%, and the tech-heavy Nasdaq 100 entered correction territory.
While equities faced relentless selling, Bitcoin’s price stability suggested a shift in investor behavior. Traders and institutions now view Bitcoin as a hedge—not just against inflation, but also against geopolitical and macroeconomic shocks. This role marks a significant change in market sentiment compared to previous economic cycles.
Crypto Holds Steady, But Not Without Pressure
Bitcoin’s performance stood out in a brutal week for risk assets. The flagship cryptocurrency posted a modest weekly gain of 0.31%. Ethereum rose 0.23%, though it remained under the psychological $2,000 level. Despite this relatively strong showing, the total crypto market cap slipped from $2.7 trillion to $2.6 trillion, reflecting some profit-taking and uncertainty.
Altcoins showed mixed results. Larger-cap tokens like Solana, XRP, and BNB traded sideways, while mid- and small-cap tokens struggled with reduced volume and investor caution. Traders remained on edge, knowing that macro forces could trigger a broader pullback across the asset class.
The Fed Speaks: Inflation Concerns Take Center Stage
Federal Reserve Chairman Jerome Powell responded quickly to the market chaos. During his Friday statement, Powell warned that Trump’s tariffs would likely lead to higher inflation and slower economic growth. He emphasized that the Fed’s priority remained focused on keeping long-term inflation expectations anchored.
“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.
His warning sent a clear message: rate cuts were not imminent. Powell argued that inflation remained too high to justify monetary easing. Several other officials, including Atlanta Fed President Raphael Bostic and Fed Governor Adriana Kugler, echoed his concerns. Both signaled that they support higher rates for longer to control inflationary pressures.
This hawkish stance caused anxiety across all asset classes. Investors had priced in at least two rate cuts for 2025. Powell’s remarks now call that assumption into question.
Trump Fires Back at Powell
Trump wasted no time in responding. He took to his social media platform and accused Powell of “playing politics.” He argued that this would be a perfect time to cut interest rates. Trump’s call for monetary easing stood in direct contrast to the Fed’s tightening posture.
“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates,” Trump posted. “Powell is playing politics instead of helping the American people.”
The tension between Trump and the Fed adds another layer of uncertainty. Investors now face not just economic headwinds but also potential policy friction between the executive branch and an independent central bank.
Stagflation Risk Looms Over Markets
Economists are growing increasingly concerned about stagflation, a toxic combination of high inflation and high unemployment. Powell addressed this risk during his remarks, acknowledging that actions to fix one part of the economy could worsen another.
For instance, cutting interest rates might boost growth, but it could also send inflation spiraling further out of control. On the other hand, keeping rates high might tame inflation but would also likely weaken job growth and consumer demand. Managing both issues at once presents one of the most difficult challenges for any central bank.
As inflation and unemployment data arrive in the coming weeks, markets will likely swing sharply in either direction, depending on whether the data confirms or contradicts the Fed’s stance.
Why Bitcoin Benefited This Time
Bitcoin and some altcoins gained ground during the turmoil for several reasons:
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Inflation Hedge Narrative: Investors still view Bitcoin as digital gold. With inflation expectations rising, more capital flowed into Bitcoin as a hedge.
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Reduced Correlation with Stocks: Over the past year, Bitcoin’s correlation with major stock indices has decreased. This detachment gave it room to rally while equities sank.
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Institutional Accumulation: Whales and institutions bought the dip. On-chain data showed that wallets holding over 1,000 BTC increased in number over the past week.
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Stable Liquidity: Crypto markets did not experience the kind of liquidity crunch seen during earlier rate hike cycles. Stablecoin inflows supported the broader ecosystem.
Still, these strengths may not hold indefinitely. If the Fed continues its hawkish tone and economic conditions deteriorate further, Bitcoin and altcoins may also come under pressure.
The Road Ahead for Crypto and Equities
The next few weeks will likely shape the market outlook for the remainder of 2025. Several critical developments will influence the price trajectory of Bitcoin and other crypto assets:
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April’s CPI Data: Investors will closely watch the Consumer Price Index report. A hot inflation print could lead to another market selloff.
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Fed’s Next Meeting: Any change in tone or guidance will impact interest rate expectations. Traders will adjust crypto positioning accordingly.
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Tariff Fallout: If other countries retaliate against Trump’s tariffs, global trade may slow down. Risk assets, including crypto, may feel the pressure.
Final Thoughts
Bitcoin outperformed traditional assets in a week defined by uncertainty and volatility. While its price stayed within the $80,000 to $90,000 range, the cryptocurrency demonstrated strength in the face of a major macro event. Ethereum and altcoins followed a similar path, though gains remained modest.
However, this relative outperformance does not guarantee immunity from further declines. With the Federal Reserve signaling a prolonged fight against inflation and Trump calling for aggressive rate cuts, the path forward remains complicated.
Investors should prepare for a tug-of-war between tightening monetary policy and political pressure for economic relief. Bitcoin has matured as an asset, but its price will still react to macro signals—especially when monetary policy and politics collide.
In the short term, Bitcoin may continue to show resilience, but traders must stay alert. The risk of stagflation and the Fed’s unwillingness to ease rates could trigger another bout of volatility. As always, disciplined portfolio management and a long-term perspective will prove essential in navigating what lies ahead.
