While traditional U.S. equity markets experienced a significant downturn Wednesday, Bitcoin (BTC) demonstrated notable stability, maintaining levels near the $84,000 mark. The divergence came as investors processed new U.S. semiconductor export restrictions targeting China and absorbed Federal Reserve Chair Jerome Powell’s cautionary remarks regarding tariffs.
The broader financial markets faced heavy selling pressure. The S&P 500 index decreased by approximately 2.2%, and the Dow Jones Industrial Average saw a 1.7% decline. The tech-heavy Nasdaq Composite suffered the most, dropping around 3% and approaching bear market conditions, largely driven by losses in technology shares.
Chipmaker Nvidia felt the immediate impact of the new export controls, with its stock falling almost 10%. The company announced it anticipates a $5.5 billion charge related to the restrictions affecting its H20 graphics processors crucial for the Chinese market.
This downturn rippled through the semiconductor industry, pulling down AMD shares by 8%, Micron by 3%, and ASML by over 7% following its own weaker earnings report.
Amidst this widespread market decline, the leading cryptocurrency, Bitcoin, showed resilience, holding its ground around the $84,000 threshold. This performance highlights a potential decoupling, at least temporarily, from traditional risk assets under specific macroeconomic pressures.
Federal Reserve Chair Powell, speaking to the Economic Club of Chicago, amplified market anxieties. He indicated the central bank requires more clarity before considering interest rate adjustments, explicitly warning that proposed tariffs could fuel “higher inflation and slower growth.”
Powell acknowledged the Fed might encounter a “challenging scenario” if its mandates for price stability and maximum employment clash due to trade policy impacts.
Adding another layer to the economic picture, recently released retail data indicated a 1.4% jump in March sales – the most robust increase in two years. Some analysts suggest this might reflect consumers accelerating purchases ahead of potential tariff implementations.
While the administration has postponed tariffs for certain nations, China remains a target. Treasury Secretary Scott Bessett suggested more details on trade policy might arrive within 90 days, although China has stated specific conditions must be met before talks proceed.