Bitcoin Outperforms Stocks Amid Trump’s Tariffs and Fed Warning
Following Donald Trump’s Liberation Day tariffs, Bitcoin and altcoins have outperformed stocks. Bitcoin (BTC) stayed between $80,000 and $90,000, while Ethereum (ETH) hovered just below $2,000.The total crypto market cap fell from $2.7 trillion to $2.6 trillion.
Stocks, however, had their worst week since 2020. Major indices like the Nasdaq 100, S&P 500, and Dow Jones entered a correction phase.
Meanwhile, Fed chairman Jerome Powell warned that Trump’s tariffs could lead to higher inflation and slower U.S. economic growth. This could cause stagflation—a combination of high inflation and unemployment, which is hard to manage.
Powell stated that the Fed isn’t in a rush to cut interest rates due to high inflation.This contrasts with Trump’s call for rate cuts, accusing Powell of “playing politics.”
Historically, Bitcoin and altcoins perform well when the Fed cuts rates. However, a more hawkish Fed during a predicted recession could negatively impact these assets.
On a positive note, crude oil prices and copper have dropped, hinting at a potential recession. Bond yields are also falling, suggesting the fed might cut rates sooner.Goldman Sachs predicts at least three rate cuts this year.
These signals could be good news for Bitcoin and altcoins, as thay typically surge when the Fed cuts rates. As an example, they rallied in 2020 during the pandemic when the Fed delivered an emergency rate cut.
