Bitcoin Drops 0.7% to $94,300 as U.S. Economy Contracts 0.3%

Bitcoin's price dropped below $95,000 on Wednesday following the release of the U.S. Bureau of Economic Analysis report, which indicated that the economy contracted at an annualized rate of 0.3% in the first quarter. This marked the first decline in economic growth since the first quarter of 2022, raising concerns about a potential recession. The contraction was attributed to the trade tariffs imposed by U.S. President Donald Trump, which have unsettled markets and impacted economic sentiment.

Economists had anticipated that the U.S. economy would grow at an annualized rate of 0.3% during the three months through March. However, the actual data revealed a contraction, highlighting the adverse effects of Trump's tariffs on economic expansion. Bitcoin's price immediately fell to around $94,300 after the report was released, according to crypto data provider CoinGecko. Other altcoins also experienced declines, with Ethereum and Solana each falling by approximately 3% to $1,760 and $143, respectively, over the past day.

Bitcoin had previously surged as the Federal Reserve implemented a series of rate cuts last year, reducing its benchmark rate to a target range of 4.25% to 4.50%. However, in December, the central bank adopted a more cautious stance, citing potential shifts in trade and immigration policy under Trump that could complicate efforts to restore price stability. The recent economic data provided hard evidence that Trump's tariffs are negatively impacting the economy's ability to grow.

Since Trump's focus on reshaping global trade, soft data such as the University of Michigan’s consumer survey have indicated a decline in sentiment among U.S. consumers. The implementation of various tariffs, including 25% tariffs on steel and aluminum imports, a 10% baseline tariff on imports from nearly every nation, sector-specific tariffs, and 145% tariffs on Chinese goods, has contributed to the economic downturn. Despite a 90-day pause on "reciprocal" tariffs announced earlier this month, the existing tariffs have already had a significant impact on the economy.

U.S. Treasury Secretary Scott Bessent suggested that American retailers would not face significant disruptions from the tariffs, despite warnings about a drop in shipping volume at the port of Los Angeles. Bessent expressed confidence in the resilience of U.S. retailers and their ability to adapt to the new trade policies. However, the economic data and market reactions indicate that the tariffs are having a tangible impact on economic growth and investor sentiment.