Bitcoin’s price dropped below $95,000 on Wednesday following the release of disappointing economic data from the U.S. Bureau of Economic Analysis. According to the report, the U.S. economy contracted at an annualized rate of 0.3% in the first quarter, marking the first economic decline since the early part of 2022. This contraction raised concerns of a potential recession and was largely attributed to the trade tariffs imposed by U.S. President Donald Trump.
Economists had expected the economy to show a modest growth of 0.3%, but the unexpected contraction in GDP has triggered fears of a slowdown. As a result, Bitcoin quickly fell to around $94,300, with other major cryptocurrencies like Ethereum and Solana also experiencing drops of around 3%, reaching $1,760 and $143, respectively. This downturn in the crypto market follows a turbulent few days for U.S. financial markets, with both stock indices and digital assets seeing significant losses.
Adding to the uncertainty, the ADP jobs report released on Tuesday revealed that U.S. employers had created just 62,000 jobs in April—far below the 125,000 expected by analysts. This disappointing jobs data has only compounded recession fears, signaling that the labor market may not be as robust as previously thought. Meanwhile, inflation appeared to cool slightly, with the Personal Consumption Expenditures (PCE) index showing a dip from March, although the full impact of Trump’s tariffs on inflation remains to be seen.
The broader U.S. equity markets also reacted negatively to these economic reports, with major stock indexes, including the S&P 500 and Nasdaq, opening with losses of over 2%. Historically, Bitcoin has shown correlation with U.S. stocks, which likely contributed to its downturn. The price of Bitcoin had surged during 2022 as the Federal Reserve implemented a series of rate cuts to support the economy, but as of December, the central bank has signaled a more cautious approach, partially due to the evolving trade and immigration policies under President Trump.
Trump’s administration has made significant strides in reshaping global trade, and the impact of his tariffs is becoming more evident in economic data. For example, consumer sentiment surveys, such as the University of Michigan’s consumer survey, have shown declining confidence among U.S. consumers, likely due to the economic disruptions caused by the tariffs. Wednesday’s GDP report reinforced concerns that Trump’s trade policies, particularly his tariffs, are having a negative effect on the economy’s ability to grow.
Despite recent efforts to ease tensions, such as a pause on “reciprocal” tariffs announced earlier this month, many levies remain in place. These include 25% tariffs on steel and aluminum imports, a 10% tariff on goods from nearly all nations, as well as specific tariffs on Chinese imports that have been active for several weeks. U.S. Treasury Secretary Scott Bessent reassured the public on Tuesday that American retailers would not face severe disruptions from these tariffs. However, recent reports from Reuters indicate that the volume of shipments passing through the Port of Los Angeles has been significantly lower than expected, signaling potential disruptions to the supply chain.
As these economic and trade challenges continue to unfold, Bitcoin’s price remains highly sensitive to broader financial trends, making it vulnerable to further downturns as the U.S. economy grapples with contraction, inflation, and trade tensions.