President Donald Trump officially announced a 104% tariff on Chinese imports starting April 9th, causing significant turmoil in financial markets. The market, which had hoped for a potential agreement until the last moment, quickly cooled down when the White House and trade advisor Peter Navarro firmly stated that "tariffs are not a negotiation tool". Accordingly, the S&P 500 index closed 1.6% lower on the 8th (US time), reversing all recent gains of 4%, and attention is focused on whether Bitcoin (BTC) can continue its rebound amid an unstable macroeconomic situation.
There is a growing tendency to avoid the accumulated fiscal deficit in the US and global monetary policy uncertainties. From the 2nd to the 7th, the S&P 500 index plummeted by 14.7%, causing investment sentiment to rapidly tighten. Bitcoin also retreated to the $75,000 range, recording its lowest level in five months. On the same day, President Trump, during a meeting with Israeli Prime Minister Benjamin Netanyahu, left open the possibility of long-term tariff policies, saying "negotiations are possible, but the goal is to redefine the trade table". Consequently, the entire market is contracting, with initial public offerings (IPOs), mergers and acquisitions (M&A), leverage loans, and corporate bond issuances being sequentially delayed.
According to Reuters, economists warned that this tariff measure could stimulate inflation and increase the risk of economic recession. However, some believe that Bitcoin's scarcity and fixed currency issuance structure could enhance its attractiveness as a hedge asset amid such chaos. Yahoo Finance analyzed that investors critical of the Federal Reserve's monetary expansion policy are turning their attention to cryptocurrencies.
In the short term, there is a high likelihood of maintaining a strong correlation between Bitcoin and the stock market, but there are interpretations that the unbalanced US fiscal situation could be a positive factor for Bitcoin in the long term. As of the 8th, the US 10-year Treasury yield rose to 4.28%, and considering it had fallen to 3.90% the day before, it suggests investors are demanding an expanded risk premium. Simultaneously, the US Dollar Index (DXY) declined from 104.2 at the end of March to 103.0 on the 8th. This trend of weakening dollar value relative to US Treasury bonds could be a factor in defending Bitcoin prices. On the last day of the previous month, Larry Fink, CEO of BlackRock, also pointed out Bitcoin's potential in a letter to investors.
Meanwhile, Michael Gapen, Morgan Stanley's chief US economist, noted in a client note on the 8th that "the Federal Reserve will maintain current interest rates for a considerable period" and "rate cuts may be brought forward only if tariff-induced shocks lead to a recession". Accordingly, it was analyzed that the Federal Reserve is likely to keep the benchmark interest rate in the 4.25-4.50% range until March 2026.
Ultimately, as investors focus on the Federal Reserve's limited means and US government's fiscal instability, there are analyses suggesting they may pay attention to assets with limited supply like Bitcoin. If the Trump administration's long-term trade conflicts continue, concerns about dollar devaluation may increase, potentially strengthening the flow of asset migration to cryptocurrencies.
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