What’s Next for Bitcoin and S&P 500 as Recession Looms?

Trump’s Tariffs: The Gift That Keeps on Hurting

Trump’s trade policy currently feels less like a complete shot in the dark instead of a well planned strategy. One minute, he’s slapping 10% tariffs on all Chinese imports, then backtracking when small businesses panic over $800 sneaker shipments. Next, he’s dangling steel tariffs over allies like Canada and Mexico, then he hits pause in exchange for vague promises on border security. These sort of unpredictable and completely off cuff actions have left Corporate America in a tailspin and consumer confidence spiralling. Economists warn of inflation déjà vu, and the Wall Street Journal is calling it “the dumbest trade war in history.”

But there is logic to the madness, and it’s crucial to understand Trump’s calculations. The U.S government needs cash, Trump’s plan is that tax imports can fund tax cuts. He also wants to strong-arm Mexico into curbing fentanyl, so he is threatening their auto parts. In an attempt to try to curb the trade deficit, he is matching China’s tariffs dollar-for-dollar. So what’s the problem? These goals clash. If Mexico “wins” by dodging tariffs, the U.S. loses revenue Trump promised to replace his tax cuts. If Mexico doesn’t cave, tariffs kick in, prices spike, and Americans pay more for goods (cars, avocados, etc.).

It’s a lose-lose. Tariffs can’t simultaneously be a cash cow and a bargaining chip. The harder Trump pushes countries to bend, the less money flows in. Meanwhile, businesses and consumers are stuck in the middle, watching prices swing like a pendulum.

China has also already started to retaliate by targeting chips and Calvin Klein, which will cause prices to spike and supply chains to choke. Meanwhile, Trump’s also floating tariffs on everything, including goods America doesn’t make, and is talking big about shaking down Denmark for Greenland. It’s a high-stakes gamble. Sure, past steel tariffs briefly boosted U.S. jobs—but also jacked up prices for everyone. Now, with new 25% metal tariffs looming and “reciprocal” levies threatening to ignite global trade brawls, businesses are stuck hedging bets. Will tariffs alone “fix” trade? Unlikely in the short term, but longer term he will be hailed as a genius if the U.S. economy can weather the recession and slip straight into a bullish super cycle.

The Crypto Summit: High Expectations and Even Higher Disappointments

The White House’s first-ever crypto summit was supposed to be a defining moment for crypto and Bitcoin investors. With many expecting it to kickstart a bullish super cycle due to aggressive federal buy-ins, tax breaks, and any factors that would further legitimize crypto. Instead the hype train derailed in real time as they witnessed a recycled PowerPoint slide and a “strategic bitcoin reserve” built entirely on seized assets. Yep, the feds hoarding crypto they already confiscated from criminals is being called innovation. Bitcoin dropped 3% before the coffee went cold.

Trump’s appointed “crypto czar,” David Sacks, hyped the reserve as a “digital Fort Knox.” but here’s the paradox, there were zero new purchases, no timeline, and no guarantees. All we got was repackaged criminal seizures, that immediately sounded the alarm bells. What about Trump’s much-ballyhooed “meme coin”? It’s down 90% since January, showing that his golden touch is losing its shine.

The crypto crowd’s frustration is at boiling point. “We asked for too little,” griped Bitwise exec Jeff Park, slamming the half-measures as “not a win.” Even Trump’s pledge to end the “war on crypto” and loosen regulations rang hollow. For the moment, Bitcoin and the crypto revolution is stuck in bureaucratic quicksand.

Economic Signals: Is a Recession Looming?

The economy is flashing all the signs of an imminent crash and consumer confidence is plummeting like a rock. The latest University of Michigan survey showed sentiment at a six-month low with families still feeling the inflationary heat that’s eating away at their paychecks—groceries alone up 5% year-over-year. It’s not just wallets feeling the squeeze as retail sales growth just stalled for the third straight month. When ordinary folks stop spending then the dominoes start falling.

Then there’s the job market. April’s jobs report showed a meager 120K new hires, that’s half of last year’s average. Unemployment claims just spiked to 240K, the highest since January. Even gig work’s drying up. Companies aren’t just hitting pause on hiring, they’re reducing their headcounts. Tech layoffs are back in fashion (yep we’re looking at you, Meta and Google), and white-collar roles are the downward spiral.

If you thought that was bad news, it gets much worse. GDP growth just limped in at 1.3% for Q1 of 2025,  that’s a massive drop from 3.4% in Q4 for 2024. We can say with relative certainty that we are witnessing a stalled economy rather than a slowdown. Now if we pair that with bond yields inverting again (the 10-year Treasury yield dipped below the 2-year for the first time since 2022), that leaves Wall Street sweating bullets. Also the S&P 500’s volatility index, the VIX, just hit 25, its highest since last October.

Persistent inflation hovering at 3.8% continues to defy target levels, tightening the vise on Federal Reserve officials. Rate reductions at this stage will appear panicked rather than strategic, which is a precarious look for policymakers. Meanwhile, Chair Powell’s repeated assurances about maintaining elevated interest rates fall flat, doing little to calm nerves as faith in the Fed’s maneuvering room erodes. Add to this combustible mix the resurgence of disruptive trade conflicts under Trump and a staggering $300 billion crypto market collapse since spring, and the economic landscape grows increasingly volatile. Could these converging crises signal an approaching recession? There are never guarantees, but the flashing red lights on the dashboard are impossible to ignore.

The 200-Day SMA: Red Line for Markets and Bitcoin

Technical analysis is all about identifying patterns and learning from history. So when Bitcoin prices broke the bottom channel of the 200-day SMA (key long term momentum indicator), traders were in full panic mode as historically when this channel is broken the likelihood of a crash becomes increasingly likely. However, it’s not all gloom as Bitcoin recovered quickly and  a sustained close above 84,500 could signal renewed bullish confidence, potentially propelling Bitcoin toward the next resistance zone near 86,600 which is the 38.2% Fibonacci retracement of its 2024 rally. Conversely, failure to hold this level risks reigniting bearish momentum, with analysts warning of a potential 30-40% slide toward 72,500 if key support at 72,500 if key support at 79,170 crumbles.

“This isn’t another Bitcoin correction in a steady upward trajectory,” said Shaun David, lead market analyst at CleaRank. “The 200-day SMA is Bitcoin’s litmus test. A clean break above 84,500 could slow bears and fuel a short squeeze toward 90,000. But if Bitcoin gets rejected here, we’re looking at a cascading sell-off. The crypto investors’ patience is thinning with lack of any positive catalyst in the near term.”

Nasdaq 100’s Precarious Position Adds Pressure

We already know the close correlation between Bitcoin and traditional markets, so it is not fighting this battle alone. The Nasdaq 100, which is considered a bellwether for risk appetite, closed 1.9% below its own 200-day SMA on Monday. This was its first breach of the key level in over a year and historical data suggests that this tech orientated index now faces a pivotal two-week window. If it remains within 4% of the SMA, stocks (and potentially crypto) could stage a rebound akin to recoveries seen in 2010 and 2018. Another break below that level and we’re likely to have a situation echoing the 2008’s crisis or 2022’s inflation-driven collapse.

“The Nasdaq’s SMA breach is the warning shot for the entire market,” David noted. “When tech stumbles, crypto feels the tremor. Bitcoin’s fate is tied to whether the Nasdaq defends this zone — or folds. I think if we see higher than expected inflation in the upcoming CPI release, the drop will be brutal and this will set the tone for a near term recession.”

Price Predictions: S&P 500 and Bitcoin

The technical charts are screaming market crash and we’re deep in overbought territory not seen since the great depression kicked off in 1929. We compared the numbers on the S&P 500 adjusted for inflation and it’s well above its long term trendline, more than at any time in the 1920’s. As the market braces for key macroeconomic data, the VOO and SPY are wobbling near their own 200-day line and if data disappoints we’ll likely see a 15%-20% drop in the coming weeks. That’s not apocalyptic numbers, but it may be enough to drive panic through the roof and prepare for a recession. We’re talking here 2008/2022 scenarios which may be compounded by geopolitical tensions. 

For Bitcoin it’s a similar story as it strongly correlates the overall market sentiment. Our next stop for BTC is $72,500 and if recession fears go mainstream we’re expecting at least $55K in the near term. If things really go south, $25-$30K Bitcoin levels are possible but at this stage seem improbable. Shaun David at CleaRank isn’t sugarcoating it either: “This isn’t a dip—it’s a trapdoor. Bulls need a miracle, bears need one bad day.” 

The upcoming CPI data adds urgency as hotter-than-expected print could cement fears of stagflation which will hammer both markets and crypto. As David notes: “The Fed’s hands are tied as rate cuts now would scream panic and hikes would crush growth. Markets hate limbo.””

How to Survive The Impending Market Crash

We hate to be the bearer of negative news or spread fearmongering but it’s our job and duty to call it as we see it. When it comes to successful investing you want to err on the side of caution. So what strategy works in a tense and overbought cycle? Firstly, if you hold primarily Bitcoin or stocks, start by allocating a decent chunk of your portfolio to defensive sectors like utilities (XLU) or consumer staples (XLP). These tend to weather recessions significantly better than stock, crypto or discretionary stocks. These so-called “boring” assets act as shock absorbers when volatility spikes.

Next, embrace a more solid strategy such as dollar-cost averaging. Any attempts to time Bitcoin price action is a fool’s errand. Instead you should set up automated weekly buys to smooth out entry points. Volatility isn’t your enemy, in the long run it’s the best discount window you could wish for. Just make sure that you plan for the worst and are able to hold in the rare case that Bitcoin unravels below $40K.

In our opinion, your most critical move at this point would be to stay sufficiently liquid. Hold at least 10-15% of your portfolio in cash or short-term Treasuries. When markets panic such as in  March 2020 or late 2022, fire sales emerge. Cash lets you pounce on oversold gems while others scramble.

Disclosure:
This analysis is provided for informational purposes only. All prices, data, and forecasts reflect market conditions at the time of writing and the latest fact-check (as of the date specified above). Investors should consult with a qualified financial advisor before making investment decisions.

FAQ