Crypto Macro Monthly: Global Trade Order Welcoming the Biggest Reshaping Wave since World War II, Bitcoin’s “Digital Gold” Consensus Strengthens

In March, the global market was deeply trapped in policy uncertainty and was eager to explore new anchor points. As US stocks accelerate valuation reconstruction, the crypto market will inevitably fluctuate with the situation. With the drop of a new tariff bomb on April 2, the global trade order is facing a deep reshaping, and economic policies of various countries are forced to be urgently adjusted. The more you are at this time, the more important it is to be patient. As the new order is gradually reshaped, market sentiment will also recover.

Trump's tariff policy has undergone many adjustments in the past March. On April 2, the Trump administration officially announced the implementation of the "comprehensive reciprocal tariff" policy - imposing a basic tariff of at least 10% on all goods exported to the United States, and imposing additional taxes on about 60 countries with significant trade deficits (such as 34% in China, 46% in Vietnam, and 49% in Cambodia) - the global trade order ushered in the most violent wave of reshaping since World War II.

Once the news was announced, the market fluctuated violently.

US stocks and the US dollar fell sharply, with the US dollar falling below the 104 mark; Nasdaq futures plummeted by more than 4%, and S&P 500 futures fell 3.5%. The stocks of the seven major technology giants in the United States fell particularly significantly, with Apple falling 7.5% after the market closed. Funds flew into safe-haven assets, and spot gold prices soared, breaking through $3,160 per ounce in one fell swoop, setting a new record high. The high and wide range of tariffs this time are far beyond Wall Street's previous estimates. Investors are worried that the tariff war will eventually hit the foundations of U.S. economic growth. First of all, the risk of supply chain breakage. Targeted tax increases for automobiles, steel and aluminum, and technology products (some tax rates reach 25%-50%) force enterprises to accelerate regional restructuring of supply chains, and the costs of industrial chains have increased sharply. The second is the hidden worries of the inflation spiral. JPMorgan Chase estimates show that after the countermeasures are superimposed, the US CPI may be pushed up by 2-2.8 percentage points.

US Consumer Confidence Index (Photo source: investing.com)

Moody's chief economist Mark Zandi has significantly increased the likelihood of a U.S. economy recession this year from 15% at the beginning of the year to 40%, and Goldman Sachs economist team also raised the possibility of a U.S. recession in 12 months to 35%. In March, some U.S. economic data indicators declined. Although non-farm data at the end of March showed that the U.S. is currently unemployment rate of 4.1%, the final value of the consumer confidence index in March fell from 64.7 in February to 57, down from the initial value of 57.9, lower than the median estimate of economists. At the same time, the core PCE price index still reached 2.8% year-on-year, confirming the dilemma of "slowing economic growth and stubborn inflation."

The Fed expressed concerns about economic uncertainty at its interest rate meeting in March. On the one hand, economic growth has shown a slowdown, and GDP forecast in 2025 has been lowered from 2.1% to 1.7%; on the other hand, inflation has strong stickiness. In this case, if interest rate cuts are chosen, it may further stimulate price increases; and maintaining high interest rates will intensify the debt pressure of enterprises, which makes the Federal Reserve, which is standing in the triple storm of inflation, politics and globalization, falls into a dilemma in policy decision-making and is not moving.

So we also see that the Federal Reserve decided to keep interest rates unchanged at 5.5% in March. After the new tariff policy was announced on April 2, traders have stepped up betting that the Federal Reserve will start cutting interest rates in June and cut interest rates by three 25 basis points (or 0.75 percentage points) by October. According to Reuters, the probability of a rate cut at the Federal Reserve meeting in June has risen to about 70%, compared with about 60% before the tariffs were announced. At the same time, the impact of tariff policies is far more than the domestic economy of the United States and the Federal Reserve's monetary policy. The "reciprocal tariff" plan implemented by Trump not only wants to use tariffs to increase fiscal revenue, but also attempts to use it as a bargaining chip to force other countries to lower tariffs or make other policy changes. Are other countries willing to cooperate with the negotiations? How many concessions can Trump make in the negotiations? At present, major economies in the world are formulating counter-revolutionaries. Some analysts believe that global trade frictions are evolving from "point-like conflict" to "systemic confrontation". In the future, the global economy and financial markets still need to be under pressure in this uncertainty.

(Source: https://www.nasdaq.com/)

U.S. stocks continued to decline in March, causing the S&P 500 and Nasdaq to fall 8.7% and 12.3% in the first quarter of 2025, marking the biggest quarterly decline since 2022. On a longer timeline, the S&P 500 has fallen from 6,200 points to 5,572 points, a drop of more than 10%, evaporating $4 trillion from its peak since Trump was elected President in November 2024.

(Photo source: New York Times/Karl Russell)

In the past two years, US stocks have attracted global funds due to "TINA" (There Is No Alternative to equity, no better choice except stocks), and their market value accounts for more than 50% of the global stock market. During the market boom, investors' optimism about US stocks has continued to push up stock prices, ignoring potential risks. However, as the economic cycle evolves, this high valuation that diverges fundamentals is becoming increasingly difficult to maintain, and institutions' optimistic expectations for US stocks are being revised: Goldman Sachs lowers the S&P 500 year-end target from 6,500 points to 6,200 points, citing "tariff risks and slowdown in profit growth"; Morgan Stanley warns that 5,500 points may be the starting point of a technical rebound, but corporate profits need to bottom out to support it. This adjustment reflects the market's doubts about the "profit-driven" logic of US stocks - the S&P 500's earnings growth forecast in 2025 has been lowered from 11% to 7%, while the profit growth advantages of the seven technology giants are narrowing, and the gap with the S&P 493 has dropped from 30 percentage points to 6 percentage points. At the same time, the chaos in US policy signals further exacerbated market panic. While urging the Fed to cut interest rates, Trump did not rule out the possibility of an economic recession; White House officials downplayed the risk of recession on the one hand, and admitted the pain of the transition period.

This contradictory statement made investors at a loss, market confidence suffered a severe blow, and responded quickly to policy uncertainty. "big 7" (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla) was the first to encounter a sell-off wave. Tesla fell nearly 36% in the first quarter and Nvidia fell nearly 20%. As an important part of the S&P 500, the market value of "big 7" has evaporated by more than $2.5 trillion since Trump took office again, which is not only a correction to the previous valuation bubble (21 times the S&P 500 price-earnings ratio), but also a "voting with your feet" to policy uncertainty. By the end of March, US stocks rebounded partially, and the S&P 500 rebounded to 5,767 points, reflecting the market's expectations of policy "softening", that is, the White House may adopt a phased or exemption strategy rather than a comprehensive tax increase. However, the facts proved that the market's optimistic expectations at that time were dashed.

It is worth mentioning that under the dynamic effects of interest rate cut expectations, tariff intensity, and recession risk, some institutions have clearly pointed out that the risk-return ratio of unilateral betting on US stocks has deteriorated significantly. For example, AQR Capital Management warned investors that in this environment, they need to rely more on diversified strategies than before and must not blindly bet on unilateral rises in U.S. stocks.

S&P 500, Nasdaq and "big 7" fell in the first quarter, and Bitcoin also suffered a double impact of market volatility and policy uncertainty, but in a fluctuation, its performance is still strong: after experiencing sharp fluctuations at the end of February, Bitcoin did not experience a unilateral decline in March, but showed a "V-shaped" oscillation first suppressed and then rose. Monthly decline narrowed to 2.09%, significantly better than the Nasdaq's 8.2% decline over the same period. For a long time in the past, Bitcoin and technology stocks have been highly similar in trends, often rising and falling.

However, during this market turmoil, Bitcoin has emerged from an independent market.

(Photo source: investing.com)

Especially in mid-to-late March, as the US SEC abolished SAB 121 (allowing banks to custody crypto assets), BlackRock and other institutions increased their holdings, and coupled with the Federal Reserve's signal of "three interest rate cuts this year" on March 20, Bitcoin ushered in a strong rebound. Overall, Bitcoin’s adjustment in March was more of a technical correction than a trend decline. Zach Pandl, head of Grayscale Research, believes that the market's negative impact on tariffs has been partially "counted" and the worst selling phase may be over.

Although the current crypto market is still shrouded in the shadow of the latest tariff policies, the US government's recognition and regulatory process for the crypto assets field has become increasingly clear, and a series of measures are paving the way for the long-term development of the industry: First, on March 6, Trump signed an executive order to formally establish the "Strategic Bitcoin Reserve" (SBR), including the approximately 200,000 BTC previously confiscated by the federal government into its reserves, and made it clear that it will not be sold within four years. This is the first time that the US government has managed Bitcoin as a permanent national asset, marking the establishment of its "digital gold" status. Although the executive order is not legislative, it lays the foundation for subsequent policies. Secondly, the SEC is gradually relaxing its historical tough stance on cryptocurrencies. It has held its first cryptocurrency roundtable in March and plans to hold four more roundtables on transactions, custody, tokenization and DeFi in April, May and June this year, clearly shifting from "law enforcement-oriented" to "cooperation and rule-making", which is regarded as a key prelude to the implementation of the regulatory framework. In particular, the SEC announced the abolition of SAB 121, which means that banks can finally legally custodial crypto assets. After the abolition of the SAB 121 policy, traditional financial institutions such as JPMorgan Chase and Goldman Sachs immediately launched crypto custody services. It is estimated that by Q2 2025, more than US$200 billion of institutional funds will enter the market through bank channels.

BlackRock CEO Fink's annual investor open letter (Source: https://www.blackrock.com/corporate/investor-relations/larry-fink-annual-chairmans-letter)

Institutional investors' enthusiasm for crypto assets, especially Bitcoin, is also continuing to rise. On March 31, Larry Fink, CEO of BlackRock, the world's top asset management company, released a 27-page annual letter to investors. In the letter, Fink warned in an extremely rare and serious tone: If the United States cannot effectively control the ever-increasing debt and fiscal deficits, then the "global reserve currency throne" that the US dollar has been firmly on for decades is likely to be replaced by emerging digital assets such as Bitcoin. It is worth mentioning that Fink mentioned Bitcoin seven times in his letter and the US dollar eight times, highlighting the importance of Bitcoin in the current financial context and hinting at its potential key role in the evolution of the global economic landscape.

With the implementation of Trump's tariff policy on April 2, the outlook for the US economy has become increasingly confusing. If the US economy does not fall into a deep recession under tariff policies and the Federal Reserve cuts interest rates in June, Bitcoin is expected to usher in a trend reversal in the second quarter. In a period of economic instability, Bitcoin’s scarcity and risk aversion attributes will become increasingly prominent. Once the market risk appetite rebounds, Bitcoin, as an emerging asset category, meets the market's potential demand for new hedging and value storage means, is expected to break through the key resistance level first and usher in a revaluation of value.

In March, the market repeatedly swayed between "stagflation concerns" and "policy relief". In the long run, if the implementation of tariffs pushes up inflation and erodes the credit of the US dollar, it will force funds to turn to non-sovereign assets. BlackRock CEO Fink asked in an investor letter: "Will Bitcoin shake the hegemony of the US dollar?" It is by no means targeted. He reminds us that the most disruptive variables in reshaping the new global financial order have emerged.