US Economy Contracts 0.5% In Q1 2025, Bitcoin Hits All-Time High In Argentina

The US Bureau of Economic Analysis (BEA) released its Personal Consumption Expenditures (PCE) and Gross Domestic Product (GDP) reports for the first quarter of 2025. While inflation was lower than anticipated, the US economy experienced a contraction before the implementation of new tariffs, raising concerns about an impending recession.

Despite the economic downturn, Bitcoin has shown resilience, even reaching a new all-time high in Argentina. This development supports the idea that Bitcoin could serve as a safe haven during economic turmoil.

Since the implementation of the tariff plan, fears of a US recession have gripped the markets. However, the release of the Q1 2025 PCE report brought some relief to certain sectors. Personal income increased by $116.8 billion, or 0.5 percent at a monthly rate, in March. This increase was primarily driven by rises in compensation and proprietors’ income.

At first glance, this data appears encouraging. The PCE report is the Federal Reserve’s preferred tool for measuring inflation, and it contains several reassuring points. The core PCE price index for March was 2.6 percent year-over-year, the lowest since June 2024, and the month-over-month index was at its lowest since April 2020. This indicates that the dollar retains its purchasing power.

However, the BEA also released its GDP report, which showed that the US economy experienced negative growth in the first quarter of 2025. This report only covers data from before the tariffs took effect, but a recession is typically defined as two consecutive quarters of negative GDP growth.

Some analysts hypothesized that the inflation figures might have been artificially heightened due to the tariffs. US consumers may have purchased more goods in anticipation of price increases, which could have skewed the usual metrics for tracking inflation.

Bitcoin has not shown signs of being affected by the potential recession caused by the tariffs. It sustained its value, trading over $94,000. Analysts have been speculating whether Bitcoin could serve as a safe haven during economic chaos, and recent data suggests it could benefit from trade disruptions.

Bitcoin also reached an all-time high in Argentina, surpassing 110 million ARS per BTC. This surge is likely due to the significant depreciation of the Argentine peso, which was trading near 1,165 per US dollar in official markets. These developments indicate that Bitcoin might successfully function as a hedge against economic instability.

Ultimately, these claims are still speculative. The tariffs may or may not cause the US to enter a recession, which would truly test Bitcoin’s status as a safe haven. From today’s perspective, at least, the hypothesis seems reasonable.