The US economy is bracing for a potential downturn, with JPMorgan forecasting a recession by the end of 2025. The catalyst? President Trump’s new reciprocal tariffs aimed at correcting long-standing trade imbalances, particularly with countries like India. These tariffs, which could increase further, are expected to weigh heavily on economic growth.
JPMorgan’s chief US economist, Michael Feroli, warned that these trade barriers could lead to a contraction in the economy, with unemployment rising to 5.3%. In addition, inflation is projected to spike to 4.4% by the year’s end, up from 2.8% in February. This rising inflation is set to influence the Federal Reserve’s decisions, with many expecting interest rate cuts starting in June 2025. However, Fed Chair Jerome Powell remains cautious, advocating for a measured approach despite the growing economic pressures.
The effects of these tariffs are reverberating across the globe. China has already retaliated with a 34% tax on US goods, and other nations are preparing countermeasures. This has triggered significant market volatility, with US stock markets shedding more than $5 trillion in value. Even major financial institutions like Barclays and Citi are bracing for a slowdown, with predictions of a global economic downturn.
Today’s market reaction to tariffs is a reminder: inflation is just the tip of the iceberg. Capital faces dilution from taxes, regulation, competition, obsolescence, and unforeseen events. Bitcoin offers resilience in a world full of hidden risks.
— Michael Saylor⚡️ (@saylor) April 4, 2025
Crypto Market Reacts to Growing Fears
As the trade war escalates, the crypto market has been hit hard. Bitcoin saw a sharp decline from its high of $88,500, dropping below critical support levels. Altcoins such as XRP, Solana, and Dogecoin also lost up to 4.5% of their value, reflecting growing investor concern about economic instability.
However, there’s a glimmer of hope for XRP, which has managed to rise by 2% following the SEC’s dismissal of its case against Ripple. This move has relieved some of the regulatory uncertainty surrounding XRP and provided a temporary boost.
What Does the Future Hold for Bitcoin?
Bitcoin’s role as a “digital gold” remains debated. Some see it as a hedge against inflation and financial instability, while others worry that an economic recession could hurt its growth. With the Federal Reserve likely to cut interest rates, Bitcoin could benefit from increased liquidity. However, broader economic challenges and market volatility are likely to keep Bitcoin’s price under pressure in the near term.
For investors, key factors to watch are the stock market’s performance and liquidity indicators. If the equity markets stabilize, Bitcoin could find the momentum it needs to recover. But if the economy worsens, Bitcoin may struggle to hold its value.
Also Read: XRP Price Set for 30% Surge as JPMorgan Predicts $6B Inflows from ETFs
As the US economy faces the dual challenges of tariffs and a potential recession, investors are looking closely at Bitcoin’s performance as a store of value in uncertain times.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
