U.S. Consumer Confidence Drops in First Report After Tariffs, But Crypto Stays Strong

Key Points:

• Trade tensions between the U.S. and China, along with inflation concerns, are creating turmoil in traditional markets.

• U.S. consumer sentiment has dropped significantly, with inflation expectations reaching their highest levels since 1981, according to Friday's University of Michigan survey.

• Investors are selling U.S. government bonds and dollars, while gold and cryptocurrencies are experiencing gains.

• Bitcoin rose by 4%, reaching $82,000, while major altcoins like SOL and AVAX saw even greater advances.

Traditional U.S. assets are in turmoil as ongoing U.S.-China trade tensions shake global markets, now further exacerbated by new data showing plummeting sentiment towards the U.S. economy and rising inflation worries.

The latest University of Michigan survey, released on Friday, revealed a sharp decline in consumer sentiment, dropping to 50.8 from 57.0, nearing its lowest level in three years and significantly lower than during the 2020 Covid shutdowns. Inflation expectations for the year ahead surged to 6.7%, up from 5% last month, marking the highest level since 1981.

In response to the data, investors began selling off long-term U.S. government bonds and the U.S. dollar, both traditionally seen as safe havens. The 10-year Treasury yield surged above 4.55%, rising more than 50 basis points in just one week. Meanwhile, the dollar index (DXY) fell below 100, reaching a three-year low. Gold, however, reached a new all-time high of $3,240 per ounce.

Following a period of intense volatility, U.S. stocks traded in a much tighter range on Friday, remaining close to neutral. As of the latest update, the Nasdaq had gained 0.6%.

In the meantime, cryptocurrency markets were climbing, with bitcoin (BTC) holding steady above $82,000, marking a 4% increase in the last 24 hours. The overall market saw a 3% rise, with leading altcoins like Solana's SOL and Avalanche's AVAX seeing gains of 6%.

Some macroeconomic analysts are worried that the recent rise in government bond yields could signal trouble for the U.S. economy, while others believe investors may be reading too much into short-term market movements.

Noelle Achison, an analyst and author of Crypto is Macro Now, noted in a Friday update that "U.S. dollars and U.S. government debt, two of the most liquid safe-haven assets, are facing significant volatility. However, other safe-haven assets aren't experiencing the same turmoil, just those linked to the U.S."

Billionaire investor Bill Ackman expressed in a post on X that he thinks "the sharp fluctuations in these assets are more likely a result of highly leveraged market participants being forced out of positions than any fundamental shifts."

He further explained, "Technical factors are behind these extreme market movements, making markets less reliable as short-term reflections of the impact of policy changes."