Bitcoin Drops 8.5% Amid Trump Tariffs, Fed Easing Offers Hope
2min read Bitcoin, a significant player in the $2.85 trillion crypto market, has recently faced significant volatility. The announcement of global reciprocal trade tariffs by President Donald Trump led to an 8.5% single-day drop in Bitcoin’s price. This decline was attributed to the uncertainty and potential economic strain caused by the tariffs.
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Despite this turbulence, analysts are optimistic about Bitcoin’s potential recovery. The Federal Reserve’s shift toward easing liquidity is seen as a potential lifeline for the cryptocurrency. According to experts, this easing could spark Bitcoin’s recovery as early as May 2025. The data and insights from analysts suggest that the Fed’s actions could significantly impact the crypto market.
Trump’s tariffs, announced on April 2, 2025, had an immediate impact on Bitcoin. The cryptocurrency experienced a sharp decline, while U.S. stocks later recovered. Charles Edwards of Capriole Investments compared the situation to the 2022 bear market bottom, noting that U.S. business expectations were at levels seen in previous major downturns, such as 2000, 2008, and 2022. The Philadelphia Fed’s Business Outlook Survey (BOS) reported business confidence falling below 15, indicating economic strain. Edwards cautioned that if the tariff war escalates or corporate margins shrink, further downside could be seen.
Bitcoin traders are closely monitoring critical levels. A daily close above $84,000 could signal bullish momentum, with the next target being $91,000, a key resistance level. However, if prices fall, Bitcoin may test the $71,000 support zone, where a rebound could occur. The U.S. macroeconomic environment is expected to determine Bitcoin’s next major move. With rising economic pressure, analysts predict that Bitcoin could hit $71,000 if conditions worsen.
The Federal Reserve’s recent policy easing offers hope for Bitcoin’s recovery. The Fed has relaxed its tight monetary stance, raising speculation about a return to quantitative easing (QE). Edwards questioned, “How long until the Powell printer starts humming?” Referring to an increase in M2 money supply, which historically boosts Bitcoin’s price. Analysts believe that if M2 liquidity rises, Bitcoin could begin recovering by May 2025.
The Fed’s actions align with market needs. On March 19, 2025, a dispatch analyst noted that ending the Fed’s quantitative tightening could boost liquidity and risk assets like Bitcoin. Federal Reserve Chair Jerome Powell expressed doubts about sustained inflationary impacts from Trump’s tariffs on March 17, 2025, referencing 2019, when tariff-related inflation was temporary. Powell’s comments suggest that the Fed may remain on hold, potentially supporting Bitcoin’s recovery.
Bitcoin’s price struggles reflect broader market dynamics. The crypto market peaked at $2.85 trillion before dropping. U.S. business confidence, as measured by the Philadelphia Fed’s BOS, fell below 15, a level tied to high-risk periods. Edwards noted that while BOS data isn’t always accurate, it has historically signaled market stress. Meanwhile, gold has outperformed Bitcoin, indicating a shift in investor sentiment towards safer assets.
Analysts see a potential turning point for Bitcoin. If the Fed increases M2 liquidity, Bitcoin could recover by May 2025. However, the $71,000 support level looms if economic pressure persists. The Fed’s next moves, expected after the April 2, 2025, tariff announcement, will be crucial in determining Bitcoin’s trajectory. The market is closely watching these developments, as they could significantly impact the cryptocurrency’s future performance.
