Trade war escalation spooks markets: NASDAQ down 3.5%, Trump reportedly eyes firing Powell
Apr 21, 2025
Key Points
- NASDAQ fell 3.5% as trade war escalation with China and reports Trump may fire Fed Chair Powell spooked investors over political interference with monetary policy.
- Bitcoin held up during the stock selloff, gaining 2% while equities tanked, marking a potential decoupling from equities that would support the digital gold thesis.
- Pump.fun's meme coin launchpad has seen volume collapse, mirroring OpenSea's crash during the NFT bust and exposing the structural fragility of speculative crypto platforms.
Summary
Markets fell sharply as trade war tensions with China intensified and President Trump reportedly considered firing Federal Reserve Chair Jerome Powell. The NASDAQ dropped 3.5%, with US stocks down over 10% year to date. Tech shares led the declines over concerns that export restrictions on semiconductor sales to China could cost companies like Nvidia billions in revenue.
The administration had publicly stated that lowering the 10-year Treasury yield was a policy goal. The yield rose instead, which typically pressures mortgage rates and affordability while potentially dragging down house prices. Firing Powell appears designed to install someone willing to pursue rate cuts. The Fed has limited direct control over the long end of the yield curve. The 10-year largely moves independently of Fed actions.
A flight to safety drove gold to record levels. Bitcoin moved differently. Tyler Winklevoss observed that Bitcoin had decoupled from stock market movements for the first time, with the market selling off sharply while Bitcoin held up. This dynamic would support the "digital gold" thesis. The signal reversed almost immediately after his post. Bitcoin is down 7% year to date but gained nearly 2% on the day of the selloff, which is atypical given how tightly it normally tracks equities.
The crypto market more broadly has cooled. Pump.fun, which at its peak generated hundreds of millions in net income through its meme coin launchpad, has seen volume collapse, echoing what happened to OpenSea during the NFT crash. Both platforms accumulated significant capital and developer talent but lack a clear path forward. The NFT boom itself was always structurally fragile. At its peak, NFT trading volume exceeded the fine art market, driven partly by speculative flipping with Crypto Punks and Bored Apes trading hands multiple times per day rather than genuine collection or investment. OpenSea's peak valuation was roughly 10 times that of Sotheby's despite a fraction of the institutional credibility and centuries less experience.