Bitcoin’s price fell below $95,000 as U.S. GDP contracted for the first time since 2022, sparking recession fears linked to Trump’s trade tariffs. Other cryptocurrencies like Ethereum and Solana also saw drops. Poor job creation and disappointing economic indicators are adding to market unease, as the equity market also declined, reflecting a tightening economy.
Bitcoin has taken a nosedive, dropping below $95,000 for the first time in recent months. This decline follows the U.S. economy’s first contraction since 2022, with the Bureau of Economic Analysis reporting a 0.3% decrease in annualised GDP in the first quarter. The news is raising concerns about a potential recession, exacerbated by President Donald Trump’s trade tariffs creating further instability in the markets.
Economists had been optimistic, projecting a slight growth of 0.3% for the same period, making the actual contraction a significant surprise. According to Trading Economics, this is the first quarterly economic drop since early 2022. Bitcoin was last seen trading around $94,300, shortly after the bleak figures were released. Other cryptocurrencies weren’t spared either, with Ethereum and Solana both sliding roughly 3% to $1,760 and $143 respectively.
In addition to the GDP report, market concerns were heightened by a lacklustre employment report released on Tuesday. The ADP showed just 62,000 jobs were added in April, roughly half of what analysts had anticipated. Although the Federal Reserve’s preferred inflation indicator, the Personal Consumption Expenditures, suggested some cooling in inflation, the broader economic effects of Trump’s tariff measures seem yet to be fully realised.
U.S. equity markets reacted negatively as well, with major indices like the S&P 500 and Nasdaq both experiencing declines exceeding 2%. Historically, Bitcoin often shows a correlation with stock market movements, highlighting its part in the broader economic landscape. The price boom noted last year came as the Fed lowered interest rates, but hints of a more cautious approach from the central bank have surfaced of late.
In recent months, announcements regarding tariffs from Trump’s administration have dramatically reshaped trade expectations, as consumer sentiment dips, evidenced by lower scores in surveys like that from the University of Michigan. The quarterly decline in economic growth serves as concrete proof that Trump’s tariffs might seriously hamper overall economic expansion.
Notably, even with a recent pause on reciprocal tariffs introduced by the President, several rates are already active — including a hefty 25% on steel and aluminium imports, a 10% baseline tariff on many products from various nations, targeted sector-specific tariffs, and steep 145% tariffs on certain Chinese goods that have been implemented for weeks now.
However, U.S. Treasury Secretary Scott Bessent is optimistic, assuring that the retailers will fare alright despite the chaos. He was quoted saying on Fox News that he assumes businesses pre-ordered adequately, and suggested that shoppers will likely adjust to price changes when it comes to imported goods. This belief seems at odds with reports indicating that shipping volumes, especially in key ports like Los Angeles, are experiencing a dramatic drop, which could have further implications for retailers going forward.
