Last week, Bitcoin's price dropped by 1.35% (as of 1 AM on the 31st). While it showed a strong performance by rising above $88,000 three times at the beginning of the week, it lost momentum towards the end and eventually dropped to around $81,000 during the weekend.
First, looking at the reasons for the rise, the Wall Street Journal report on the 23rd had a significant impact. It suggested that the policies related to the 'Tariff Liberation Day' announced by the US on April 2nd were not as strong as expected.
Not only the Wall Street Journal but also major economic publications like Bloomberg reported similar stories, and the market immediately reflected this as a strong upward factor for asset prices. As of Monday, the 25th (US time), Bitcoin showed an approximately 5% increase. Tesla's stock, which had been particularly suppressed in the same risk asset group, even surged by 12% that day.
The positive mood began to break on the 27th (Thursday). On this day, the US government suddenly scheduled a universal car tariff during trading hours and announced a 25% tariff rate.
Automobiles are a major export item for advanced countries like Germany and Japan. Naturally, Europe retaliated. Talk of retaliatory tariffs began, and international trade tensions started to become tense again as they were a week ago. As a result, risk asset prices that had risen from Monday's tariff conflict resolution expectations began to fall.
Tariff concerns and rising PCE prices… delivering the final blow
While the overall price trend was triggered by changing expectations of US tariff policies, macro-economic indicators played a significant role at specific turning points. Many economic indicators were released this week, but the February US Personal Consumption Expenditures (PCE) price index released on the 28th (Friday) was the decisive factor for the decline.
On that day, the PCE price index rose 2.5% compared to the same month last year. The core PCE price index, excluding agricultural and energy items, rose 2.7% year-on-year. Both figures were 0.1 percentage points higher than Wall Street's expectations. The prices that were expected to rise due to Trump's tariff policies began to actually increase.
Particularly, the 'Super Core' price, which the Federal Reserve considers important, rose from 3.096% in January to 3.341% in February. The Super Core price refers to the price index excluding agricultural and energy items, as well as housing costs.
The University of Michigan's expected inflation rate also increased compared to the previous month, heightening anxiety. Especially, the Atlanta Fed's 2025 Q1 GDPnow figure released in the early morning of the 29th (Saturday) significantly dropped to -2.8%, delivering the final shock to the market.
In fact, while the macro-economy was moving this way, the cryptocurrency industry saw some not-so-bad news. First, the US Securities and Exchange Commission (SEC) completely ended its securities law violation lawsuit with Ripple Labs. Additionally, it concluded investigations into potential securities law violations for DeFi projects like Immutable (IMX). Experts continue to discuss the possibility of a spot ETF approval for XRP.
The Federal Deposit Insurance Corporation (FDIC) and the Commodity Futures Trading Commission (CFTC) announced that they will withdraw the majority of cryptocurrency-related guidelines that were conservatively implemented during the Biden administration. Following Strata, GameStop, a NASDAQ-listed company, announced plans to invest $1.3 billion in Bitcoin.
This week's tariff decision… focus on employment indicators and Powell's remarks
However, these positive signs do not seem to have much power in the current market. The most important thing is how the US tariff policy, which has a strong influence on the cryptocurrency market and the economy as a whole, will proceed. Related to this, the uncertainty is expected to be somewhat cleared up on the 2nd of this month.
In terms of macroeconomic indicators, the US Department of Labor's Job Openings and Labor Turnover Survey (JOLTs) will be released on the 1st (Tuesday), and the ADP Non-Farm Employment Change will be announced on the 2nd (Wednesday).
On the 3rd (Thursday), the US Initial Jobless Claims will be released, and on Friday, the 4th, the US Non-Farm Employment Index and March Unemployment Rate will be disclosed.
Of particular interest is the speech by Federal Reserve Chairman Jerome Powell scheduled around midnight on the 5th. The US economy is currently in a triple-hardship period where prices are rising, and the economy is stagnating, with the president showing no willingness to support the stock market.
The Federal Reserve essentially has no clear solution, but depending on the economic recovery plan and future policy outlook presented in this speech, risk asset prices are expected to be significantly affected. We wish our readers a successful investment this week.
