Bitcoin Price Rebounds as Federal Reserve Warns of Trump Tariff Risks: Market Analysis

By: Payel

Published on: Apr 18, 2025

Bitcoin (BTC-USD) staged a modest recovery in early Thursday trading, climbing back toward thewhichbrieflydippedto83,700 following Powell’s remarks, rebounded to $84,800 as markets digested the implications of slower growth and persistent inflation.

This article unpacks the Fed’s warnings, Bitcoin’s volatile response, and the broader crypto market’s role in a shifting macroeconomic landscape.

Federal Reserve’s Stagflation Warning Sparks Market Turbulence

In a speech at the Economic Club of Chicago on Wednesday, Jerome Powell cautioned that Trump’s proposed 60% tariffs on Chinese imports could exacerbate inflationary pressures while stifling economic growth. This dual threat of stagflation—stagnant output coupled with rising prices—triggered a flight to traditional safe havens like gold, which soared to a record high of $3,322 per ounce.

Key Takeaways from Powell’s Speech:

• Tariff-Driven Inflation: Higher import costs could reignite US inflation, complicating the Fed’s rate-cut plans.


• Growth Concerns: Slower global trade may dampen GDP projections, raising recession risks.


• Crypto Regulation: Powell reiterated the need for stablecoin legislation to ensure financial stability.

The 10-year US Treasury yield initially dipped to 4.279% on Wednesday but rebounded to 4.33% by Thursday morning, reflecting lingering uncertainty.

Bitcoin’s Rollercoaster: From 86,000to86,000to83,700 and Back

Bitcoin’s price swung wildly following Powell’s remarks, underscoring its sensitivity to macroeconomic signals:

• Pre-Speech High: BTC briefly touched $86,000 amid optimism around ETF inflows.


• Post-Speech Plunge: Prices tumbled 2.7% to $83,700 as traders priced in stagflation risks.


• Thursday Recovery: BTC clawed back to $84,800, supported by bargain hunters and altcoin momentum.

Analysts at QCP Capital noted Bitcoin’s failure to capitalize on its “digital gold” narrative during the sell-off:
“Unlike gold, Bitcoin has not caught a safe-haven bid. The ‘alternative store of value’ narrative isn’t gaining traction in the current macro regime.”

Altcoins Outperform: Solana Leads the Charge

While Bitcoin struggled for direction, major altcoins posted outsized gains. Solana (SOL-USD) surged 8% to $.Ethereum(ETH-USD),however,lagged,dipping0.47$1,586.30 amid concerns over network congestion.

Why Solana Shines in Uncertainty:

1. Institutional Interest: Hedge funds are increasingly betting on Solana’s scalability.


2. DeFi Growth: Total value locked (TVL) on Solana-based protocols hit $15B in April.


3. NFT Momentum: Solana’s NFT sales volume surpassed $500M this month.

Gold vs. Bitcoin: Safe-Haven Showdown

Gold’s rally to all-time highs has reignited debates about Bitcoin’s role as a hedge against economic instability.
 
Asset           Performance (April 2025)                        Key Driver
Gold                   +12%                      Stagflation fears,central bank buys
Bitcoin                    +5%                       ETF inflows,halving anticipation
US Treasuries      Yield volatilityed                policy uncertainty

Gold’s appeal lies in its historical resilience during crises, while Bitcoin remains tethered to liquidity conditions and speculative demand.

The Trump Tariff Wildcard: Implications for Crypto

Trump’s proposed tariffs—part of his 2025 campaign platform—threaten to disrupt global supply chains and fuel inflation. For crypto markets, two scenarios loom:

1. Risk-Off Sentiment: A broad market sell-off could drag Bitcoin below $80,000.


2. Dollar Weakness: A depreciating USD might boost Bitcoin’s appeal as an inflation hedge.

AJ Bell’s Danni Hewson notes:
“Tariffs could dump cheap Chinese goods on global markets, suppressing inflation but hurting domestic industries. Bitcoin’s reaction will hinge on how the Fed balances growth and price stability.”

Regulatory Crossroads: Powell Pushes for Stablecoin Rules

Powell emphasized the urgent need for a stablecoin regulatory framework, urging Congress to act:
“Stablecoins like USDC and USDT could play a transformative role in payments, but only with robust safeguards for consumers and financial stability.”

Potential Regulatory Outcomes:

• Banking Guidelines: Easier access to banking services for crypto firms.


• Reserve Requirements: Mandates for 1:1 backing of stablecoins with cash or Treasuries.


• Consumer Protections: Enhanced transparency and audit standards.

These measures could legitimize stablecoins but may stifle innovation in the short term.

Market Outlook: Will Bitcoin Reclaim $85,000?

Bitcoin’s near-term trajectory hinges on three factors:

1. April Inflation Data (Due May 10): A hotter-than-expected CPI print could delay Fed rate cuts, pressuring BTC.


2. US Treasury Auctions: Weak demand for government bonds might revive stagflation fears.


3. Geopolitical Risks: Escalating Middle East tensions could bolster gold over crypto.

Price Levels to Watch:

• Support: $83,000 (50-day moving average).


• Resistance: $86,000 (April 16 high).

Conclusion: Navigating a Shifting Macro Landscape

Bitcoin’s recovery reflects cautious optimism, but its inability to match gold’s safe-haven rally highlights lingering skepticism. As Trump’s tariff plans and Fed policy dominate headlines, crypto investors should brace for volatility while monitoring regulatory developments and macroeconomic indicators.

The Fed’s next move—whether toward rate cuts or prolonged tightening—will likely determine if Bitcoin can solidify its role as “digital gold” or remain a risk-on asset in a stagflationary era.