Recession Risk Returns: Trump Tariffs Rattle Markets, Risk-Off Mood Sets In

This week, markets transitioned sharply into risk-off mode as President Donald Trump unveiled sweeping tariffs on imports, triggering a broad sell-off in equities and crypto, renewed recession fears, and a repricing of Fed expectations.

The Trump Tariff Doctrine, effective as early as April 5, imposes a baseline 10% tariff on all imports, rising as high as 49% on certain “non-cooperative” countries. A new 25% tariff on foreign-made automobiles took effect April 2, while Chinese goods now face tariffs exceeding 70% when cumulative measures are considered. Canada and Mexico are technically excluded from the reciprocal tariff regime but still face aggressive levies tied to immigration and fentanyl narratives. The EU has already signaled countermeasures if talks fail, while China denounced the action as "unilateral bullying." As a response, China strikes back at the US tariffs with extra 34% tariffs imposed by all U.S. goods from April 10, 2025.

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Macro & Market Moves:

• Equities: U.S. stocks sold off sharply, with all indices down significantly for this week. Particularly NASDAQ 100 declined by 10% vs Friday close last week. Tech bore the brunt—Apple, Amazon, and Nike all fell reflecting expectations of higher input costs and softening global demand
  
  S&P 500: Declined by 9% this week.
  
  Dow Jones Industrial Average: Dropped 7.8% this week.

• Yields: The bond market priced in a clear flight to safety. Yields fell 10bps across all major curves, with the US 10-year Treasury Fell below 4% for the first time since October of the previous year, reflecting growing recession concerns.
• Oil: Crude prices declined 2.9% despite supply concerns, reflecting broader demand fears. with Brent crude falling to $69.38 per barrel and West Texas Intermediate dropping to $66.13
• Gold: A marginal decline, despite risk aversion, with investors instead favoring fixed income and USD alternatives.
• FX: The USD weakened across all major pairs, as the market began to price in a softer Fed path and rising trade tensions.
• Fed Rate Path: Market participants now expect four cuts in 2025, up from two, shifting the conversation from inflation to recession risk.

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Analyst Sentiment

Leading analysts across Wall Street are turning cautious. JPMorgan and Goldman Sachs both revised their growth outlooks downward, citing potential contractionary effects from tariffs. UBS flagged that the tariff shock could mimic the early stages of a stagflationary regime, particularly if retaliatory measures escalate.

While tariffs are technically inflationary, the prevailing market belief is that the Fed will be more sensitive to a bear market, led by the fear of recession, than cost-push inflation, leading to more accommodative policy.

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Crypto & Digital Assets: Tariff Fallout Triggers Pullback

Bitcoin, Ether Dip Amid Global Selloff

After nearing $88,000, Bitcoin fell 3% to $82,600. Ether declined 6%, falling below $1,800, with weekly high nearing $1,900 and Solana tumbled 6.5% to the $118 range from weekly high if $126. The broader GMCI 30 Index dropped 4.6%, with altcoins like Doge weekly high of $0.180 and weekly low of $0.1555. XRP with weekly high of $2.0897 and low of $2.0254, and ADA posting similar losses with weekly high if $0.77 and weekly low of $0.6519.

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FDUSD Depeg Raises Stablecoin Risk Flags

In a concerning development for stablecoin markets, FDUSD (First Digital USD) depegged by over 11% after Justin Sun raised solvency concerns regarding First Digital Trust, its issuer. The panic spread rapidly, highlighting the persistent fragility of centralized stablecoins in moments of perceived credit risk. While markets quickly sought clarity, the event served as a wake-up call for due diligence, especially as stablecoin regulation edges closer.

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Michael Saylor’s Strategy Goes Big on the Dip

In a bold contrarian move, Strategy (formerly MicroStrategy) acquired 22,048 BTC for $1.92 billion, at an average price of $86,969/BTC. This brings their total holdings to 528,000 BTC, acquired at an average of $67,458/BTC, worth $35.63 billion.

Saylor’s move reinforces institutional conviction in Bitcoin amid market volatility—and suggests that dips in BTC remain buying opportunities for long-term allocators.

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Solana: Cooldown, Not Collapse

SOL is stabilizing around the $116 mark, with technical support intact. Beneath the price weakness lies an ecosystem undergoing recomposition:

• Daily fees are down 97% from January.
• Memecoin volume is drying up—but institutional and infrastructure traction is rising.
• New entrants like Zeta Market’s Bullet, Zebec’s crypto debit card, and BlackRock’s tokenized $BUIDL fund are showing that utility is taking root.
• Meanwhile, Solana ETF filings from Fidelity and Franklin Templeton continue progressing, and uptime remains perfect.

SOL’s price may lag fundamentals, but validator health, real-world integration, and on-chain tooling are signaling a foundation that could support future inflows once risk appetite returns.

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Circle Files for IPO: Stablecoin Giant Eyes Public Market

Circle, issuer of USDC, filed a prospectus for its long-awaited IPO. While pricing and share count remain undisclosed, CEO Jeremy Allaire emphasized transparency and regulatory engagement as core goals of the move.

This coincides with Congressional movement on stablecoin legislation: the House Financial Services Committee is set to vote on a new bill next week, complementing the GENIUS framework passed by the Senate last month.

Circle’s IPO could be a bellwether moment for digital dollar infrastructure—especially if USDC adoption accelerates amid regulatory clarity.

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Key Themes to Watch Next Week

• Tariff retaliation responses from China and the EU.
• April 5 and April 9 tariff activation.
• U.S. economic data: Jobless claims, ISM services.
• Bitcoin ETF flows as institutional positioning recalibrates.
• Stablecoin legislation movement and potential Senate showdown.

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Final Takeaway

The market’s message this week is clear: The growth, not inflation, is now the primary concern. With U.S. tariffs reshaping global trade and financial flows, institutional allocators are recalibrating fast—toward defensives, quality fixed income, and selective plays in digital assets. Crypto saw turbulence, but deep-pocketed conviction buyers like Strategy are still loading up.

Meanwhile, the FDUSD depeg incident reminds us that not all “stable” assets are created equal, reinforcing the need for transparency, regulation, and robust issuer balance sheets.

If the trade war escalates, the next few weeks may present rare entry points across both financial markets and crypto—with a recessionary pricing regime creating tactical opportunities for the patient and prepared.