- Poor manufacturing data from the US Federal Reserve could put downward pressure on Bitcoin prices in the short term.
- Bitcoin has been trading at around $84,000 per coin despite concerns about economic slowdown and potential tariffs.
- Bitcoin has shown greater resilience to recent economic shocks compared to traditional stock markets.
Cryptocurrency analysts warn that Bitcoin prices could face downward pressure following the release of concerning manufacturing data from the US Federal Reserve. On April 17, the Philadelphia Federal Reserve Manufacturing Index reported the most severe decline in business activity since 2020, based on its monthly survey of 250 American manufacturers.
Researchers at crypto exchange Bitunix stated that Bitcoin is "under short term pressure" due to the disappointing economic indicators. However, they suggested Bitcoin could experience a "strong comeback" if prices remain above $83,000 per coin. As of April 18, Bitcoin has maintained a trading value of approximately $84,000, according to data from Google Finance.
The Federal Reserve’s report indicates that "indicators for general activity, new orders, and shipments all fell and turned negative… suggesting subdued expectations for growth over the next six months," as noted in the official release. This negative outlook comes as US manufacturers prepare for potential impacts from President Trump’s proposed tariffs on imports, which could increase production costs significantly.
Economic Stagflation Concerns
The combination of declining economic activity and rising prices presents a challenging scenario for financial markets, including cryptocurrencies. Felix Jauvin, a Blockworks macroeconomic analyst, described the situation as "Economic activity falling off a cliff and any activity that remains, the prices are going up." He characterized this as the "absolute worst scenario for policy makers," especially given the uncertainty surrounding potential tariffs.
This economic condition limits central banks’ options to support markets during downturns, as rising prices typically constrain their ability to implement supportive monetary policies.
Bitcoin’s Resilience Amid Market Turbulence
Despite these economic headwinds, Binance reported in April research that Bitcoin has demonstrated greater resilience to recent macroeconomic challenges compared to stocks and other cryptocurrencies. Since Trump announced his tariff plans on April 2, Bitcoin briefly declined over 10% but has since recovered to trade relatively flat, while the S&P 500 remains down by approximately 7%.
"Even in the wake of recent tariff announcements, BTC has shown some signs of resilience, holding steady or rebounding on days when traditional risk assets faltered," Binance stated in their analysis.
Trump initially proposed double-digit tariffs on virtually all foreign goods but has since paused planned levies on certain countries. However, his administration still intends to implement significant taxes on many Chinese imports, raising concerns among cryptocurrency executives about potential negative impacts on blockchain networks in the event of a broader trade war.
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