Bitcoin, Ethereum, the tech-heavy S&P 500 and Japan’s Nikkei 225 all posted their worst quarterly performances in more than three years, reflecting a broader market downturn.
The gloomy market mood is largely due to global trade policy changes expected today, when President Donald Trump will announce new tariffs on a number of trading partners in a speech at the Rose Garden at 10:00 PM (UTC+3). Analysts are divided on whether these economic measures will be applied reciprocally or a softer approach will be taken.
“This decision could go either way,” said Sid Powell, CEO of Maple Finance, noting the uncertainty. Powell noted that a softer stance, such as a 10% tariff instead of the feared 25%, could trigger a risky rally in crypto markets.
Nicolai Sondergaard, a research analyst at Nansen, suggested that depending on Trump’s final tariff strategy, the second quarter of 2025 could still follow historical seasonal trends. “Tariff fears, which have been driving risk-off recently, appear to be approaching a local peak,” Sondergaard said.
Sondergaard added that the U.S. administration’s gradual shift from April to June toward a more bilateral, negotiation-oriented approach suggests an all-out trade war is unlikely. However, ongoing confusion over country-specific tariff proposals could keep markets volatile in the short term.
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Investors initially expected at least two rate cuts in 2025 based on signals from the Fed’s March 19 FOMC meeting. But Trump’s trade policies have added to the uncertainty, delaying clear guidance from the central bank. “The Fed has adopted a ‘wait and see’ stance,” Sondergaard explained. “Chairman Powell has made it clear that sentiment alone will not determine rate cuts, and that only hard economic data, particularly labor market indicators, will drive policy changes.”
He also noted that while the Treasury’s quantitative tightening (QT) has slowed due to tight money market conditions, this does not indicate that the Fed will become completely dovish.
Powell from Maple Finance echoed these concerns, saying the Fed’s monetary policy will be a key factor in determining whether crypto markets ease in Q2. “If Trump’s ‘flexible’ tariff rhetoric on April 2 translates into lighter policies, markets could breathe a sigh of relief,” Powell said. “However, liquidity remains tight and the U.S. dollar remains strong. Without a significant macroeconomic catalyst such as a CPI decline to 2.5% or lower jobless claims, BTC’s potential recovery could be limited to $100,000 and markets could experience a choppy, sluggish recovery.”
*This is not investment advice.