As the global tariff war initiated by former U.S. President Donald Trump escalates, fears of a U.S. economic recession are growing. On March 10, U.S. stocks experienced a “Black Monday,” with the Dow Jones Industrial Average dropping 2.08%, the Nasdaq Composite Index falling 4%, and the S&P 500 Index declining 2.7%. The cryptocurrency market was not spared, with Bitcoin (BTC) plunging below 77.000 touching 76,560, a single-day drop of over 8%. Ethereum (ETH) also suffered, briefly falling below $1,800, a level not seen in four years.
However, the market has shown signs of recovery, with BTC rebounding to 82,000 and ETH rising above 1,900. Despite this, uncertainty remains as to whether this uptick is a short-term rebound or a reversal signal.
Trump’s policies, particularly his tariff measures, have significantly impacted global markets. On February 1, Trump imposed a 10% tariff on U.S. goods and a 25% tariff on imports from Mexico and Canada, sparking a tariff war. Although Mexico and Canada initially yielded, Trump later announced additional tariffs on China, further inflaming tensions. These measures have led to retaliatory tariffs from Canada and Mexico, exacerbating market instability.
The U.S. economic indicators are mixed. February’s non-farm payroll increased by 151,000, slightly below expectations, while the unemployment rate remained stable at 4.1%. However, inflation hit a new high, with the year-on-year rate reaching 4.3% in February. Institutions like the Federal Reserve Bank of Atlanta and JPMorgan predict a potential U.S. recession, with GDP expected to contract by 2.4% in the first quarter.
The cryptocurrency market’s volatility is closely tied to these economic indicators. On March 10, BTC spot ETFs saw a net outflow of 369 million, continuingasix - daystreak of out flows,while ETH spot ETFs experience danet out flow of 37.527 million over four days. Despite the recent recovery, the market remains cautious.
Analysts suggest that the U.S. may be at a crossroads between economic growth and recession. While private sector balance sheets are healthy, high CPI and insufficient economic growth momentum pose significant risks. The cryptocurrency market, similarly, faces a dichotomy: BTC’s price surge and strategic reserves suggest bullish potential, but declining liquidity and growth momentum indicate bearish pressures.
In the short term, the market is unlikely to see a true reversal without macroeconomic improvement. However, long-term optimism persists, with figures like Arthur Hayes predicting BTC could reach $1 million, despite potential short-term declines. Whales have accumulated over 65,000 BTC in the past 30 days, signaling confidence in a future rebound.
In conclusion, the cryptocurrency market remains highly sensitive to external economic factors, including tariffs, inflation, and geopolitical tensions. Investors are advised to remain vigilant as the market navigates these turbulent times.