Bitcoin Faces Short-Term Pressure as US Manufacturing Data Plummets

Bitcoin's spot price is expected to face downward pressure following the release of the latest US Federal Reserve manufacturing data, which revealed some of the most dismal figures in recent history. On April 17, the Philadelphia Federal Reserve Manufacturing Index, a monthly survey of 250 US-based manufacturers, reported significant declines in overall business activity, marking the sharpest downturn since 2020. This data has put Bitcoin under short-term pressure, according to researchers at a crypto exchange. They noted that while Bitcoin could experience a strong comeback, it would depend on the cryptocurrency maintaining its price above $83,000 per coin. As of April 18, Bitcoin was trading at approximately $84,000 per coin.

The Federal Reserve's bearish report comes at a time when manufacturers are preparing for the potential impact of sweeping tariffs planned by the US President, which could increase production costs. The report indicated that indicators for general activity, new orders, and shipments have all fallen and turned negative, suggesting subdued expectations for growth over the next six months. This economic downturn, coupled with rising prices, could limit central banks' ability to support markets during a downturn, potentially dealing a blow to financial markets, including cryptocurrencies.

Analysts have expressed concerns that the combination of rising prices and slowing production could have a negative impact on financial markets. The economic activity is falling sharply, and any remaining activity is seeing price increases, which is an absolute worst-case scenario for policymakers, especially with no clear idea of how permanent the tariffs will be. However, Bitcoin has shown resilience to recent macroeconomic shocks compared to stocks or other cryptocurrencies. Since the tariff plans were announced, Bitcoin has traded roughly flat after an initial decline, while the S&P 500 index of US stocks remains down by around 7%.

Despite the potential for a trade war to harm blockchain networks, Bitcoin has demonstrated some signs of resilience. It has held steady or rebounded on days when traditional risk assets faltered. The initial plans to impose double-digit levies on virtually all foreign goods were later paused for certain countries, but high taxes on many Chinese imports are still a concern among crypto executives. The overall outlook for Bitcoin remains uncertain, with analysts bracing for a potential slide in the short term, but also acknowledging the cryptocurrency's ability to recover if it maintains its price above a certain threshold.