Markets are navigating rising stagflation risks and evolving US–China trade dynamics, while institutional adoption continues to accelerate in the crypto space. Key macro reports and policy decisions in the days ahead could shape sentiment across traditional and digital asset markets.
Macro: Signs of Stagflation Pressure
US–China trade tensions remained high in late April 2025, as the effects of the 145% US tariffs and China’s 125% retaliatory measures became clearer. Chinese exports to the US fell 12.2% in May—the 10th consecutive monthly decline—highlighting the toll on trade flows. Combined with softening US consumer demand and persistent inflation, the strain is increasingly weighing on both economies.
On May 1, Chinese state media reported that the US has reached out to China for tariff discussions. US officials, including Treasury Secretary Scott Bessent and economic adviser Kevin Hassett, expressed hope for easing trade tensions. Hassett mentioned „loose discussions“ on both sides, and China’s recent easing of duties on some US goods was seen as progress. Despite condemning the tariffs, China has prepared a list of US products to be exempted, signalling cautious openness to negotiations.
In Q1 2025, the US economy contracted by an annualised 0.3%, its first decline since 2022, primarily due to a 50.9% surge in imports as businesses rushed purchases ahead of Trump’s new tariffs—driving a record trade deficit. Combined with weak April job creation (just 62,000 ADP private payrolls), the data raised stagflation fears and triggered a sharp sell-off, with the Dow plunging 700 points. However, markets quickly rebounded, supported by softer-than-expected March PCE inflation and a stronger-than-forecast ISM Manufacturing PMI—signalling expansion and tempering concerns about an imminent recession.
Crypto: US Policy Pivot and Institutional Momentum Fuel Crypto Market Growth
US Commerce Secretary Howard Lutnick has outlined a bold strategy to position bitcoin as a cornerstone of America’s economic future, including an investment accelerator for miners using off-grid energy like waste gas. This policy shift marks a key break from past cycles, where miners and related ETFs often lagged bitcoin’s momentum—now, with government backing and rising institutional interest, they are better poised to lead the charge.
Meanwhile, regulatory developments are also accelerating. On 30 April, the SEC approved the public launch of ProShares Trust’s leveraged XRP ETFs, including Ultra XRP and Short XRP, marking a significant step toward XRP’s institutional integration. However, despite the approval, the ETFs have not yet launched, which may explain the fleeting excitement and subsequent retracement in XRP’s price. Market participants are now looking ahead to 19 May, when CME Group plans to launch XRP futures, potentially providing a clearer signal of institutional demand for XRP-related products.
Amid these broader shifts, Strategy (formerly MicroStrategy) has continued its aggressive bitcoin accumulation strategy, acquiring 15,355 BTC for USD 1.42 billion at an average price of USD 92,737 per coin. This brings its total holdings to 553,555 BTC, valued at over USD 53 billion, solidifying bitcoin as its core treasury strategy. Additionally, Strategy has announced a USD 21 billion equity offering to fund further bitcoin acquisitions, signalling its ongoing commitment to the digital asset.
Looking Ahead: Key Macro Events and Growing Institutional Demand for bitcoin
Two pivotal economic events are set to shape market sentiment in the coming week. Today, 2 May, the US Bureau of Labour Statistics will release the April Employment Situation report at 8:30 AM EDT, with nonfarm payrolls expected to show a slowdown in job growth amid ongoing inflationary pressures and broader economic uncertainty. On 7 May, the Federal Open Market Committee (FOMC) is anticipated to maintain interest rates at 4.25%-4.50%, striving to balance inflation control with sustainable economic growth.
As institutional interest in cryptocurrencies, especially bitcoin, continues to rise, these macroeconomic developments will be closely watched for their potential impact on digital asset markets.
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