April 2025 Edition

All the information in this letter is NOT to be considered financial advice; it is the author’s personal view and agreed views of others from their overviews of present markets. This content includes a summary of articles that I believe to be insightful and data that has been verified. The purpose is to provide content that is of interest and relevance to MarginCall.Club members.

Welcome to the April 2025 Edition of the MarginCall.Club FinTech Newsletter

This month, we’ll review the key financial events of March 2025 and explore their potential impact on April and beyond. As always, our goal is to provide you with timely, relevant insights to help you navigate the market effectively.

Financial Market Highlights – March 2025

Stock Market:

  • Dow Jones Industrial Average (DJIA): Closed March at 41,583.90, down 1.69% for the month (from approximately 42,300 at the end of February), reflecting tariff-related fears and a hot inflation reading that sparked a late-month sell-off of 715.80 points on March 28.
  • S&P 500: Ended at 5,580.94, down 1.97% (from approximately 5,692 at February’s end), with a significant 5.63% drop in March alone due to trade war concerns and tech sector weakness.
  • Nasdaq Composite: Closed at 17,322.99, down 2.7% (from approximately 17,800), driven by declines in tech giants like Alphabet (-4.9%), Meta (-4.3%), and Amazon (-4.3%) amid tariff uncertainty.

Economic Indicators:

  • GDP Growth: The Fed’s March projection revised 2025 GDP growth down to 1.7% from 2.1%, signaling a cautious outlook amid tariff impacts and slowing consumer momentum. Q1 2025 estimates suggest growth around 1.5%-2%.
  • Inflation: March CPI data showed a hotter-than-expected rise, with core inflation climbing to 2.8% year-over-year (up from 2.5% in February), driven by tariff pressures and energy costs. Headline CPI hit 2.7% in November 2024, trending upward into March.
  • Employment: Unemployment rose slightly to 4.1% by March’s end (down from a revised 4.2% in December 2024), with job growth cooling but remaining resilient at 256,000 jobs added in December 2024.
  • Interest Rates: The Fed held rates steady at 4.25%-4.50% in its March 19 meeting, citing “increased economic uncertainty,” with only two 25-basis-point cuts now projected for 2025, likely starting in June.

Cryptocurrency Update:

  • Bitcoin (BTC): Closed March at approximately $83,201.67 (per X post on March 31), down from a February high of $92,500, reflecting a volatile month with a low of $78,200 on February 27 and tariff-induced risk-off sentiment.
  • Ethereum (ETH): Ended March at roughly $1,875.16 (per CNBC on March 29), a sharp 6% daily drop, tracking a 15% monthly decline amid broader crypto weakness.
  • Regulatory Developments: The SEC’s scrutiny of crypto markets intensified as Trump’s tariff policies raised inflation fears, potentially impacting crypto’s appeal as an inflation hedge.
  • DeFi and NFTs: DeFi activity remained subdued, while NFT gaming saw sporadic interest tied to the Minecraft movie’s $301 million global box office success.

Geopolitical and Macroeconomic Factors:

  • Geopolitical Tensions: Trump’s March 27 auto tariff announcement and subsequent 10% universal tariff imposition on April 5 escalated global trade war fears, prompting retaliatory measures from Canada and Europe.
  • Energy Prices: Crude oil rose to $69.05 per barrel by March 28 (West Texas Intermediate), up from $67.70 mid-month, driven by Middle Eastern tensions and tariff-related supply chain disruptions.

Key Events to Watch in April 2025

  • Federal Reserve’s April Signals: Markets await further clarity on the Fed’s rate cut timeline as tariff-driven inflation pressures mount.
  • Q1 2025 Earnings Wrap-Up: Tech and auto sectors will reveal the early impact of Trump’s tariffs, with GM and Tesla already showing volatility.
  • Crypto Market Response: Bitcoin’s ability to hold above $80,000 amid tariff turmoil will shape sentiment, with Ethereum under additional pressure below $2,000.

Market Sentiment and Investment Insights

Cryptocurrency Market:
Bitcoin’s March decline to $83,201 reflects heightened risk aversion as Trump’s tariff rollout on April 5 triggered a broader market sell-off (S&P 500 down 9.1% for the week ending April 4). Support is now eyed at $79,000-$80,000, with analysts cautiously optimistic for a rebound to $90,000 if trade war fears ease.

Key Market Threats – April 2025:

  • Tariff Fallout: Trump’s April 5 tariffs could slash GDP growth and reignite inflation, with economists warning of a potential 1% hit to 2025 growth.
  • Equity Volatility: The S&P 500’s 10.5% two-day drop on April 3-4 (worst since March 2020) signals ongoing turbulence, with the Nasdaq nearing bear market territory (-19% YTD).
  • Crypto Liquidations: A break below $79,000 for Bitcoin could accelerate selling, testing $75,000 support.

Bitcoin Technical Analysis: Cup & Handle Pattern:
Despite March’s pullback, the weekly chart’s cup-and-handle pattern holds, with a $275,000 target by August/September 2025 still plausible. However, a deeper correction to $75,000-$79,000 may occur if tariff fears persist, delaying the next rally phase. A $500,000 peak by October 2025 remains a long-term possibility tied to halving cycles and adoption trends.

Updated Q&A Section

Q: Why are yields spiking, and what’s driving swap spreads in April?
A: Key factors include:

  • Tariff-Induced Inflation Fears: The 10-year Treasury yield hit 4.27% by March’s end (down from 4.79% in January), but spiked post-tariff announcement as markets priced in higher inflation risks.
  • Federal Reserve Uncertainty: The Fed’s March “hold” and reduced 2025 cut expectations (two vs. four) signal a tighter policy stance, boosting yields.
  • Geopolitical Risk Premiums: Trade war escalation and energy price shocks (oil at $69+) sustain elevated risk premiums.
  • Liquidity Shocks: Crypto and equity sell-offs (e.g., Nasdaq’s 10% weekly drop) have driven bond market repositioning.
  • Summary: Yields may peak in Q2 2025 if inflation exceeds 3%, but a Fed pivot later in the year could cap upside if Bitcoin and equities stabilize.

Final Thoughts on Crypto

April’s tariff-driven market chaos has intensified focus on Bitcoin’s resilience. At $79,082.20 (per X post on April 6), it’s testing critical support. Global markets remain on edge, with the Dow down 9.9% YTD, S&P 500 off 14%, and Nasdaq down 19%. Cryptocurrencies, despite volatility, retain long-term appeal as hedges against fiscal and trade uncertainty.

My Thoughts on the Coming Month

The March-to-April tariff escalation has upended markets, challenging Trump’s Bitcoin strategy. Here’s my updated take:

Deductions:

  • U.S. Debt Crisis: National debt at $40 trillion+ faces new pressure as tariffs threaten growth, potentially accelerating Bitcoin’s strategic role.
  • Strategic Loss in 2024: Democrats’ 2024 retreat still appears prescient amid this economic turbulence.
  • 2028 Comeback Strategy: A Democratic resurgence in 2028 (e.g., Michelle Obama) gains traction as Trump navigates fallout.

Opinions:
Trump’s Bitcoin Strategy:

  • The plan to acquire 1 million BTC over five years is tested by the $79,000 dip, yet offers a buying opportunity.
  • Bitcoin as a debt-offset asset retains bipartisan intrigue, though tariff costs may strain funding.

Potential Plan:

  • Year 1: Accumulate 200,000 BTC (~$16 billion at current prices), capitalizing on the dip.
  • Mining Push: Subsidize U.S. mining to counter tariff-driven energy cost spikes.

Long-Term Vision:

  • By 2028, Bitcoin could reach $1M+ if adoption surges, offsetting debt woes. The tariff shock delays but doesn’t derail this trajectory.

Final Thoughts:
The April sell-off (Dow -2,200 points on April 4) lowers my confidence in Trump’s plan to 55/45 from 60/40, reflecting tariff headwinds. Still, Bitcoin’s dip to >$79,000< with a potential bounce to >$90,000< remains a key watch point.

Regards,
James