Bitcoin, altcoins, and the stock market continued their downward trend on Friday as the trade war between the U.S. and China escalated.
Bitcoin (BTC) price dropped to $82,000, erasing some of the gains made during the Asian and European markets. Ethereum (ETH) dropped below $1,800, while the market cap of all coins fell to $2.64 trillion.
The stock market’s performance was even worse as futures tied to the Dow Jones, S&P 500, and Nasdaq 100 indices plunged by over 3%. This means that these blue-chip indices have all moved into a correction.
Trade war escalates
Bitcoin, altcoins, and equities declined after China announced its retaliatory measures against the U.S. In a statement, Beijing said it would impose a 34% tariff on all goods imported from the U.S.
In addition, China will restrict exports of certain rare earth minerals, halt sorghum imports from U.S. companies, and add 11 American firms to its unreliable entity list.
These measures mark the most significant response to Donald Trump’s Liberation Day tariffs. Other countries, especially those in Europe, have called for negotiations to prevent the trade war from expanding.
Trump and senior officials have warned that the U.S. will deliver reciprocal tariffs on any country that retaliates. They’ve urged trading partners to lower their tariffs and non-tariff barriers instead.
Therefore, Bitcoin, altcoins, and the stock market are falling as these actions lead to higher odds of a recession. Polymarket data shows that traders have boosted their recession odds to 56%. Companies like Goldman Sachs and PIMCO have also boosted their recession odds.
These fears have pushed market sentiment into extreme territory. The CNN Money Fear and Greed Index dropped to 6, the lowest reading since the onset of the COVID-19 pandemic.
Investor pessimism intensified after billionaire and former Bond King Bill Gross warned against buying the dip. He said:
“Investors should not try to ‘catch a falling knife. This is an epic economic and market event similar to 1971 and the end of the gold standard except with immediate negative consequences.”
Bitcoin, altcoins, and the stock market fall after NFP data
Markets also weakened after the U.S. released the latest nonfarm payrolls (NFP) report. The data showed that unemployment rose to 4.2% in March, up from 4.1% in February.
The economy added 228,000 jobs, beating analysts’ median forecast of 137,000. However, the manufacturing sector, which Trump aims to protect with his tariff policy, created just 1,000 jobs.
These figures will likely have minimal impact on the Federal Reserve, which remains focused on inflation and GDP growth.
Meanwhile, the bond market is signaling expectations of lower interest rates. The 10-year Treasury yield fell to 3.89%, while the 30-year and 2-year yields declined to 4.38% and 3.5%, respectively. If the Fed cuts rates, it would likely be bullish for Bitcoin, altcoins, and the broader stock market.