Global Asset Landscape Reshaped: Crypto Assets Become the New Balance Pivot

At the beginning of April, the new tariff policy triggered a global asset crash, but subsequent comments about easing the policy alleviated market concerns. After investor sentiment was calmed, a new round of risk appetite ensued, with Bitcoin leading a strong rally.

From the data, although the hard macroeconomic indicators such as consumption and employment in the U.S. in April have not yet been substantially impacted, the risks have clearly increased. In March, the U.S. non-farm payrolls added 151,000 jobs, and the unemployment rate rose to 4.1%, which is better than expected. However, the new tariff policy has caused the average tax rate to soar from 2.4% to 21.4%, with the import price index rising 18.6% year-on-year. Retail sales surged by 1.4% month-on-month in March, but the actual consumption momentum, excluding automobiles, only grew by 0.5%, a decrease of 0.15 percentage points compared to February.

This policy-driven short-term consumption overdraw stands in stark contrast to the largest decline in the consumer confidence index since 1978 in April. The preliminary value of the University of Michigan consumer confidence index in April was 50.8, significantly lower than the expected 53.5. The one-year inflation expectation from the University of Michigan in April surged to 6.7%, reaching a new high since November 1981; the five-year inflation expectation preliminary value was 4.4%, the highest level since June 1991. The significant weakening of expected soft indicators reveals various unsustainabilities.

The U.S. economy is facing a stagflation dilemma of "high inflation - low growth - policy conflict." The adverse effects of tariff policies will soon accelerate through three channels: the supply chain, the job market, and consumer confidence. The International Monetary Fund has lowered its global economic growth forecast for 2025 from 3.3% to 2.8%, with the U.S. growth forecast decreasing to 1.8% and the Eurozone to 0.7%.

Regarding the Federal Reserve, the PCE inflation rate has remained above the 2% target for 14 consecutive months, with short-term inflation expectations jumping to 3.8% in April, the highest since 1982. In this context, the Federal Reserve's meeting on March 19 decided to keep the federal funds rate unchanged in the range of 4.25%-4.50%, clearly caught in a triple dilemma: a rate cut could exacerbate inflation expectations, a rate hike would accelerate economic recession, while maintaining the status quo faces pressure. The Federal Reserve Chairman stated that policymakers will continue to monitor the economic situation and will consider adjusting interest rates after waiting for more clear signals.

As a "anchor point" for global monetary policy, the Federal Reserve is undergoing the most severe policy imbalance test in nearly four decades. According to widespread external predictions, in the most optimistic scenario, if inflation decreases faster than expected, the Federal Reserve may shift to a neutral interest rate more quickly, potentially even starting to cut rates in the first half of 2025.

Throughout April, US dollar assets faced a double blow from policy uncertainty and economic downturn, particularly in the first half of the month when market sentiment was extremely pessimistic. On April 3, the three major US stock indices encountered a historic drop, with the Dow Jones Industrial Average falling 5.50% in a single day, the Nasdaq plunging 5.82%, and the S&P 500 dropping 5.98%, marking the largest single-day decline since March 2020. Tech stocks became a hard-hit area, with several large tech companies experiencing significant declines due to rising supply chain costs and export restrictions. An economic research director even raised the probability of a US recession to 79%, reflecting deep market concerns about the long-term negative impact of tariff policies.

U.S. stocks saw a significant rebound at the end of the month. On April 23, the S&P 500 index rose by 9.52% in a single day, and the Nasdaq index increased by 12.16%, marking the second-largest single-day gain in history. This rebound was partly due to market expectations for potential adjustments to tariff policies, as well as better-than-expected earnings reports from some tech giants boosting market confidence.

Despite the fact that U.S. stocks recovered most of their losses at the end of the month, future policy uncertainties and economic downturns are creating a stronger resonance, and U.S. stocks may still be the first to be hit. Wall Street generally believes that this rebound may only be a "technical correction in a bear market." Some strategists warn investors to "sell on rallies," as the market still faces policy uncertainties and the risk of economic recession. Before the resumption of rate cuts to save the market and progress in tariff negotiations, the short-term rebound in U.S. stocks remains overshadowed.

Despite suffering a heavy blow from tariffs in April, Bitcoin's performance exceeded market expectations, redefining its position among global assets. In mid to late April, Bitcoin's price strongly broke through the $94,000 mark, with a single-day increase of over 3%, setting a new high for the year. This upward trend corresponds with gold reaching new highs, highlighting its "digital gold" attribute. Additionally, in stark contrast to the U.S. stock market, which was impacted by tariff policies during the same period, Bitcoin's volatility significantly decreased in April.

This stability has attracted medium to long-term funds to accelerate their entry. From April 21 to 23, the net inflow of the U.S. Bitcoin spot ETF exceeded $900 million for three consecutive days, pushing the total market capitalization of global Crypto Assets to surpass $3 trillion, reigniting bullish sentiment across the entire Crypto Assets market. Investor confidence peaked at its highest level in over two months, with U.S. media describing it as an alternative choice seeking a safe haven. During this wave of increase, the wealth of long-term holders significantly grew. According to data, from April 1 to 23, the market value of long-term holders increased from $345 billion to $371 billion, an increase of $26 billion, indicating that long-term holders are gaining returns by holding on.

According to statistics, from January to early April, Bitcoin experienced a correction of over 30%, which aligns with the historical market cycle patterns of 2013, 2017, and 2021, typically showing a correction after reaching new highs, flushing out weaker investors before resuming an upward trend. In addition, the decoupling of Bitcoin from traditional markets, along with investors' demand for non-correlated assets, has strengthened the confidence of long-term holders in Bitcoin as a store of value.

Data shows that there are currently 16.7 million BTC in profit across various wallets, a level often referred to as the "optimistic threshold." Historically, similar patterns in 2016, 2020, and early 2024 have led to bull markets. When the profit supply remains above this area, it often boosts investor confidence and triggers sustained price momentum, typically pushing Bitcoin to new all-time highs within a few months. After Bitcoin broke through $90,000, the number of active addresses on the chain surged by 15%, and the number of large wallets reached a four-month high, further validating the bullish consensus among investors.

Driven by the surge in Bitcoin prices, the global market capitalization of Crypto Assets surpassed 3 trillion USD on April 23, with Bitcoin's market cap reaching 1.847 trillion USD, exceeding several global tech giants as well as the precious metal silver, making it the fifth largest asset after gold, Apple, Microsoft, and Nvidia.

The rise in this ranking has made Bitcoin the only digital asset in the global top ten asset list. More notably, Bitcoin has shown a "decoupling" from its long-term correlation with US tech stocks. In April, Bitcoin's price surged by 15%, while the Nasdaq 100 index only rose by 4.5% during the same period, highlighting its independent market performance and changes in asset attributes. Compared to the stock market fluctuations caused by tariff policies in April, Bitcoin has recently demonstrated stronger price stability and lower volatility, which may encourage more listed companies to consider allocating Crypto Assets in their financial strategies.

There is no doubt that Crypto Assets are rewriting the underlying logic of global asset pricing. In April, investment institutions raised their target price for Bitcoin in 2030 from $1.5 million to $2.4 million, based on increased institutional interest and the growing acceptance of Bitcoin as "digital gold."

At the moment, the market rebound in April is a temporary alleviation of concerns about a market collapse and economic recession triggered by tariffs. The further trend will depend on whether the trade war can be resolved in time and the trajectory of the US economy. Given that the most optimistic interest rate cuts will not occur until after January, market divergences remain, and short-term fluctuations are inevitable. As traditional financial markets are shaken by the trade war and economic cycles, the independence and counter-cyclical properties of Crypto Assets may attract more funds seeking diversified asset allocation.