US stocks plummeted for the second day in a row on April 4 as Federal Reserve Chair Jerome Powell cautioned that “reciprocal tariffs” could significantly impact the economy, potentially leading to higher inflation and slower growth. The Dow Jones dropped 2,200 points, while the S&P 500 slid by 10% over the two-day period.
Powell stated that tariffs are likely to cause a temporary rise in inflation but may also lead to more persistent effects. He emphasized that it’s too early to determine the path for monetary policy, despite a strong labor market with a low unemployment rate of 4.2%.
The economy has shown resilience, adding 228,000 jobs in March and an increase in non-farm payrolls exceeding expectations. However, the Consumer Price Index (CPI) rose by 2.8% year-over-year, which may be concerning given Powell’s warning.
Bitcoin is expected to experience volatility as investors seek a hedge against uncertainty. Analysts point out that Bitcoin’s price appears to be “decoupling” from stock market downturns, with the cryptocurrency holding steady above $82,000 levels despite recent economic concerns. The price of Bitcoin surged to $84,720 on April 4, reflecting unusual price action.
China’s retaliation with 34% tariffs on US goods and Trump’s pressure on Powell to cut interest rates may contribute to increased market volatility. This could push Bitcoin’s price upward as investors seek a safe haven in uncertain times.
Source: https://cointelegraph.com/news/bitcoin-decouples-stocks-lose-3-5-t-amid-trump-tariff-war-and-fed-warning-of-higher-inflation