The global asset diversification accelerates, Crypto Assets emerge strongly.

At the beginning of April, Trump's reciprocal tariff policy triggered a significant decline in global assets. However, he then stated that tariffs "would be significantly reduced" and confirmed that Powell would continue to serve as the chairman of the Federal Reserve, easing market concerns over turmoil in the Fed's leadership. After investor sentiment was calmed, a new round of risk appetite was sparked, with Bitcoin leading a strong rally.

From the economic data perspective, the macroeconomic hard indicators such as consumption and employment in the U.S. for April have not yet experienced substantial shocks, but risks have clearly increased. In March, the U.S. non-farm payrolls added 151,000 jobs, and the unemployment rate rose to 4.1%, with data better than expected. However, the new tariff policy implemented in April caused the average tax rate to soar from 2.4% to 21.4%, and the import price index rose by 18.6% year-on-year. The purchasing spree in the automotive industry drove a month-on-month retail sales growth of 1.4% in March, but the actual consumption growth excluding automobiles was only 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 drop in the consumer confidence index since 1978 in April. The preliminary value of the University of Michigan consumer confidence index for April was 50.8, far below the expected 53.5, marking the fourth consecutive month of decline. More notably, the preliminary value of the University of Michigan's 1-year inflation expectation soared to 6.7% in April, the highest level since November 1981; the 5-year inflation expectation preliminary value reached 4.4%, the highest level since June 1991. The significant weakening of these soft indicators reveals the unsustainability of economic development.

The U.S. economy is facing a stagflation predicament of "high inflation - low growth - policy conflict." The negative effects of tariff policies will gradually manifest through three channels: supply chains, the job market, and consumer confidence. The latest report from the International Monetary Fund has lowered the global economic growth forecast for 2025 from 3.3% to 2.8%, with the U.S. growth rate expected to drop to 1.8% and the Eurozone to 0.7%.

On the Federal Reserve side, the PCE inflation rate has been above the 2% target for 14 consecutive months, with short-term inflation expectations jumping to 3.8% in April, the highest since 1982. Against this backdrop, the Federal Reserve decided on March 19 to maintain the federal funds rate in the range of 4.25%-4.50%, clearly caught in a dilemma: lowering interest rates could exacerbate uncontrollable inflation expectations, raising interest rates would accelerate economic recession, while maintaining the status quo faces political pressure. The Federal Reserve Chairman stated that they will continue to observe the economic situation and consider adjusting interest rates after waiting for clearer signals.

As the "anchor point" of global monetary policy, the Federal Reserve is undergoing the most severe policy imbalance test in nearly forty years. There are widespread predictions that, in the most optimistic scenario, if inflation decreases faster than expected, the Federal Reserve may shift to a neutral interest rate more quickly, and even possibly start cutting interest rates in the first half of 2025.

In April, US dollar assets faced a double blow from policy uncertainty and economic downturn, leading to extremely pessimistic market sentiment. On April 3, the three major US stock indices experienced a historic drop, with the Dow Jones Industrial Average, Nasdaq, and S&P 500 falling by 5.50%, 5.82%, and 5.98%, respectively, marking the largest single-day decline since March 2020. Technology stocks were hit hard, with several large tech companies experiencing significant declines due to rising supply chain costs and export restrictions.

However, the U.S. stock market 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, while the Nasdaq index increased by 12.16%, marking the second-largest single-day gain in history. This rebound was partly due to market expectations of possible adjustments to tariff policies, as well as better-than-expected earnings reports from some tech giants boosting market confidence.

Despite the recovery of most losses in the U.S. stock market at the end of the month, uncertainties in future policies and risks of economic downturn still exist. Wall Street generally believes that this rebound may only be a "technical correction in a bear market." Before the Federal Reserve resumes interest rate cuts to stimulate the economy and substantial progress is made in tariff negotiations, the short-term rebound in the U.S. stock market still faces many challenges.

In contrast, Bitcoin's performance in April exceeded market expectations, redefining its position among global assets. In mid to late April, the price of Bitcoin strongly broke through the $94,000 mark, with a daily increase of over 3%, reaching a new high for the year. This surge corresponds with the simultaneous new highs in gold, highlighting its "digital gold" attributes. In stark contrast to the US stock market impacted by tariff policies, Bitcoin's volatility significantly decreased in April.

This stability has attracted medium to long-term capital to accelerate entry. From April 21 to 23, the net inflow of the US Bitcoin spot ETF exceeded $900 million for three consecutive days, pushing the total market value of global Crypto Assets to surpass $3 trillion and reigniting bullish sentiment in the entire Crypto Assets market. Investor confidence has risen to its highest level in over two months, with US media describing it as an alternative choice in search of a safe haven.

In this wave of price increases, the wealth of long-term holders has significantly grown. Data shows that 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 the long-term holding strategy has paid off.

The decoupling of Bitcoin from traditional markets, along with the growing demand from investors for non-correlated assets, has strengthened the confidence of long-term holders in Bitcoin as a store of value. Currently, there are a total of 16.7 million BTC in profit across various wallets, a level commonly referred to as the "optimism threshold." Historically, similar patterns have led bull markets in 2016, 2020, and early 2024.

After Bitcoin broke through $90,000, the number of active addresses on the chain surged by 15%, and the number of large holders' wallets reached a four-month high, further validating the bullish consensus of funds. The total market value of global crypto assets exceeded $3 trillion on April 23, with Bitcoin's market value reaching $1.847 trillion, surpassing several global tech giants and precious metal silver, becoming the fifth largest asset, only behind gold, Apple, Microsoft, and Nvidia.

The long-term correlation between Bitcoin and U.S. tech stocks has shown signs of "decoupling." In April, the price of Bitcoin increased 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 volatility 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.

Crypto Assets are rewriting the underlying logic of global asset pricing. Some investment institutions have significantly raised the long-term target price of Bitcoin based on increased institutional interest and the growing acceptance of Bitcoin as "digital gold."

Currently, the market rebound in April seems to be a temporary alleviation of concerns regarding market collapse and economic recession triggered by tariffs, and future trends will depend on whether the trade war can be resolved in a timely manner, as well as the trajectory of the U.S. economy. Given that even the most optimistic interest rate cuts will not occur until after January, market divergences remain, and short-term fluctuations are inevitable. However, when traditional financial markets are shaken by the trade war and economic cycles, the independence and anti-cyclical properties of crypto assets may attract more funds seeking diversified asset allocation.