Financial chaos in the US: the dollar weakens, stocks fall and cryptocurrencies rise under...

Financial chaos in the US: the dollar weakens, stocks fall and cryptocurrencies rise under pressure from Trump and the Fed

The US market is experiencing a turbulent period. While stock indices are falling sharply and the dollar index has hit a three-year low, cryptocurrencies are maintaining their upward trend. The main drivers of these changes are President Donald Trump's sharp calls directed at the Federal Reserve (Fed) and his efforts to influence US monetary policy.

Equity markets ended the day in the red on 21 April. The S&P 500 index fell by 2.4%, the Nasdaq technology index fell by 2.5% and the Dow Jones lost almost 1 000 points, equivalent to 2.5%. Since the start of the year, the main US indices have thus fallen by more than 12%, while the technology Nasdaq has come close to losing 18%. This decline reflects the growing nervousness in the markets caused by Trump's calls for interest rate cuts.

"Preemptive cuts" in interest rates are being called for by many investors, according to Trump. On 21 April, the US president said on Truth Social that there is "virtually no inflation" due to lower energy costs, food and generally lower inflation. Still, he reiterated his call for a cut in rates, which Fed Chairman Jerome Powell is simultaneously holding at a high 4.5%. Trump called Powell "Mr. Too Late" and a "big loser" and called for his removal - "firing can't come fast enough".

The situation worsened after Powell's comments that interest rate hikes may be necessary if inflation eases. The Fed is expected to take a more wait-and-see stance at its May 7 meeting, with only a 13% chance of a rate cut, according to analysts at CME Fed Watch.

The devaluation of the US dollar is another consequence of this uncertainty. The dollar index (DXY), which measures the dollar's strength against a basket of leading currencies, has fallen by more than 10% this year. It hit a three-year low of under 98 points this week. Raoul Pal, founder of Real Vision, commented on the situation saying: "Everyone needs and wants a weaker dollar to service their dollar debt. It is the purest form of global liquidity and is currently the main driver of global M2."

The situation is different in the cryptocurrency market. Although stocks and the dollar are weakening, cryptocurrencies are maintaining their gains. The total capitalisation of digital assets has remained stable at around $2.83 trillion. Bitcoin, the largest cryptocurrency, reached a four-week high of around $88,500 on April 22 and maintained its strong position.

Analysts are watching these events with close attention as the current situation may indicate a change in the global financial environment. The prospect of interest rate cuts, a weakening dollar and steady growth in cryptocurrencies continue to be key themes for investors.

The future of the US economy is uncertain and market developments are likely to continue to be influenced by political commentary, Fed decisions and global economic factors. But one thing is clear - the financial world is on the move and change is coming faster than ever.

*This is not an investment recommendation.

The Coingarage team