Author: Luke, Mars Finance

At the end of March 2025, the global financial markets experienced a severe turmoil. The U.S. stock market faced a "Black Friday" on March 28, with the S&P 500 index dropping by 1.97%, the Nasdaq index plummeting by 2.7%, and the Dow Jones Industrial Average falling by 715 points, a decline of 1.69%. This downward trend quickly spread to the cryptocurrency market, with Bitcoin (BTC) falling from $84,000 in the afternoon of March 29 to $81,565 in the morning of March 31, Ethereum (ETH) dropping to a recent low of $1,767, and Solana (SOL) hitting a low of $122.68 at 6 PM on March 30.

According to Coinglass data, approximately 70,000 cryptocurrency investors were liquidated in the past 48 hours, resulting in losses of about $200 million. This cross-market chain reaction not only triggered widespread panic but also exposed the fragility of the current economic environment. This article will analyze the reasons behind this sharp decline by combining insights from several authoritative institutions and discuss key events that investors should pay attention to this week and their potential impacts.

The Beginning and End of the Plunge: From Black Friday to the Chain Reaction of Crypto Weekend

Key Points and Data

The plunge in U.S. stocks began on March 28, "Black Friday." According to Investopedia, on that day, the S&P 500 index fell by 112.37 points to 5,580.94 points, the Nasdaq index dropped by 481.04 points to 17,322.99 points, and the Dow Jones Industrial Average decreased by 715.80 points to 41,583.90 points. Tech stocks led the decline, with the seven major tech giants (including Apple, Microsoft, Amazon, etc.) losing about $505 billion in market value, and the Philadelphia Semiconductor Index falling by 2.95%. This was the largest single-day drop since the U.S. stock market crash on March 10, marking a severe adjustment at the end of the first quarter of 2025.

The cryptocurrency market soon followed under pressure. Bitcoin fell from $84,000 on the afternoon of March 29 to $81,644 within 8 hours, a decline of over 3%. It then rebounded to $83,536 at 6 PM on March 30 but failed to maintain the upward momentum, dropping to $81,565 by 6 AM on March 31. Ethereum fell to $1,767, and Solana dropped to $122.68. According to The Block data, the total market capitalization of cryptocurrencies fell from a peak of $3.9 trillion to $2.9 trillion, a decline of 25%, while trading volume shrank from $126 billion after the November 5 elections to $35 billion, a decrease of about 70%.

Market Sentiment and Capital Flow

The synchronized decline of U.S. stocks and the crypto market reflects an increase in investors' risk aversion towards risk assets. Galaxy Research pointed out that Bitcoin is significantly correlated with tech stocks; during this decline, crypto-related stocks such as MicroStrategy (MSTR) plummeted by 10% on Friday, and Coinbase Global (COIN) fell by over 6%, indicating that panic sentiment spread rapidly. InvestingHaven analyst Taki Tsaklanos believes that Bitcoin's short-term support level is at $77,000, and if it falls below this level, it could trigger larger-scale liquidations.

Causes of the Plunge: Multiple Factors Intertwined Impacting the Market

Macroeconomic Pressures, Inflation Exceeding Expectations, and Declining Consumer Confidence

The U.S. Department of Commerce released the core PCE price index for February on March 28, showing a month-on-month increase of 0.4% and a year-on-year increase of 2.8%, both higher than market expectations of 0.3% and 2.6%. Goldman Sachs noted in a research report on March 31 that this data indicates persistent inflationary pressures, which could push the core PCE up to 3.5%, and downgraded the 2025 GDP growth forecast from 1.5% to 1.0%, raising the probability of a recession from 20% to 35%. The University of Michigan's consumer confidence index fell to 57, the lowest since 2022, with consumer inflation expectations for the next year rising to 5% and five-year expectations reaching 4.1%, both at multi-decade highs.

Statements from Federal Reserve officials intensified market concerns. Boston Fed President Collins stated that "maintaining high interest rates for a longer period is appropriate," while the Richmond Fed President warned that tariffs could lead to "more persistent inflationary shocks." Goldman Sachs analysts believe that inflation exceeding expectations has weakened rate cut expectations, causing capital to flow into safe-haven assets, which has become a significant driver of the market decline.

Policy Uncertainty: Panic Triggered by Trump's Tariff Measures

The "reciprocal tariff" policy planned by the Trump administration to be announced on April 2 is a core catalyst for this plunge. Goldman Sachs expects that tariffs will be levied at an average of 15% on all trading partners, an increase of 5 percentage points from previous expectations, which could raise import costs and trigger global retaliatory actions. Evercore ISI senior strategist Matthew Aks warned, "If other countries take retaliatory actions, it could lead to tariff escalation risks, further undermining market confidence." State Street Global Advisors Chief Investment Strategist Michael Arone pointed out, "Uncertainty continues to plague the market, and next week could become a peak of volatility."

Investopedia cited expert opinions stating that the tariff policy not only raises inflation expectations but could also weaken corporate profitability and consumer purchasing power, particularly impacting the technology and automotive sectors. Freedom Capital Markets Chief Global Strategist Jay Woods stated, "As significant events approach, investors tend to avoid risk, leading to intensified weekend sell-offs." X platform user @White7688 also mentioned, "BTC is influenced more by external funds from ETFs, resembling tech stocks rather than safe-haven assets."

Capital Flow and Market Linkage

The U.S. stock market's "Black Friday" triggered a chain reaction in risk assets. Nasdaq data shows that the correlation between the Nasdaq index and Bitcoin reached 0.67 at the beginning of 2025, with its 2.7% decline quickly transmitting to the crypto market. Bloomberg commodity strategist Mike McGlone analyzed, "If the S&P 500 continues to weaken, Ethereum could drop to $1,000, and Bitcoin may test $72,000." Gold prices hit new highs, and the yield on the U.S. 10-year Treasury bond fell from 4.369% on Thursday to 4.254% on Friday, indicating a rapid flow of funds into safe-haven assets. Crypto-related stocks like MicroStrategy fell by 11%, and MARA Holdings also dropped by 11%.

The Block pointed out that the end-of-quarter capital rebalancing, combined with next week's "super risk week" (April 2 tariff announcement and April 5 non-farm payroll data), prompted investors to adjust their positions in advance to avoid risk, moving funds from risk assets to gold and U.S. Treasuries. Galaxy Research analyst Alex Thorn believes, "The shrinking trading volume may signal greater volatility ahead, and reduced liquidity will amplify price impacts."

Intrinsic Market Risks: Leverage and Shrinking Trading Volume

InvestingHaven predicts that if Bitcoin falls below $77,000, it could trigger about $300 million in long liquidations, further exacerbating the decline. The Block analyzed that trading volume has dropped from a peak of $126 billion to $35 billion, indicating that market participants may be waiting for regulatory clarity, resulting in a lack of buying support in the short term.

Key Events for Investors to Watch This Week

As the market enters early April, investors should closely monitor the following key events, which may further impact the trends in U.S. stocks and the crypto market:

· April 2 (Tuesday): Overview of Trump's "Reciprocal Tariff" Policy Announcement: The Trump administration plans to announce an average 15% tariff on all trading partners. Goldman Sachs expects this move to raise import costs and potentially trigger global retaliatory tariffs. If the tariff measures are as severe as expected, U.S. stocks may drop by 3%-5%, and Bitcoin could fall below the $80,000 support level; if the policy is less stringent than expected (such as excluding the semiconductor and automotive industries), the market may see a brief rebound, with Bitcoin likely rising to $85,000. Matthew Aks from Evercore ISI noted, "The market's reaction will depend on the timing and targeted industries of the tariffs."

· April 3 (Wednesday): Overview of the European Central Bank's March Monetary Policy Meeting Minutes Release: The European Central Bank will release the minutes of its March meeting, which may reveal the latest assessment of the Eurozone economy and inflation, as well as whether to accelerate rate cuts. If the minutes show a dovish inclination (such as further rate cuts), it could boost global risk assets, and the crypto market may follow the rebound in U.S. stocks; if a cautious stance is maintained, it could exacerbate risk aversion, suppressing Bitcoin and Ethereum prices. Michael Arone from State Street believes, "The ECB's policy direction will influence global liquidity expectations."

· April 4 (Thursday): Overview of Federal Reserve Chair Powell's Speech: Powell will deliver a speech on the U.S. economy and monetary policy, potentially addressing inflation data and tariff impacts. If Powell signals a rate cut (such as in response to economic slowdown), U.S. stocks and the crypto market may rise by 2%-3%, with Bitcoin possibly breaking through $83,000; if he emphasizes maintaining high interest rates, it could intensify selling pressure. Bloomberg analyst Mike McGlone warned, "Powell's tone will directly affect the short-term trends of risk assets."

· April 5 (Friday): Overview of the U.S. Non-Farm Employment Report Release: The March non-farm employment data will reveal the health of the U.S. labor market, with expectations for new jobs to be below 200,000 and the unemployment rate potentially rising to 4.2%. If the data is weak (new jobs below 150,000), it will strengthen rate cut expectations, benefiting U.S. stocks and the crypto market, with Bitcoin possibly rebounding to $86,000; if the data exceeds expectations, it could push U.S. Treasury yields higher, putting pressure on risk assets. Goldman Sachs expects that "the non-farm data will be the climax of market volatility this week."

· April 5 (Friday): Overview of Microsoft's 50th Anniversary Celebration and Copilot Update: Microsoft will celebrate its 50th anniversary and may announce significant updates to its AI assistant, Copilot. If the updates exceed expectations, it could boost confidence in tech stocks, with the Nasdaq index potentially rising by 1%-2%, indirectly lifting crypto market sentiment; if the updates are lackluster, the impact will be limited. Taki Tsaklanos from InvestingHaven believes, "The performance of tech stocks will provide a barometer for the crypto market."

Institutional Views and Market Outlook

Goldman Sachs: Rising Risk of Economic Recession

In a research report on March 31, Goldman Sachs significantly raised its tariff expectations for 2025, forecasting an average tariff rate increase of 15 percentage points, core PCE inflation rising to 3.5%, GDP growth slowing to 1.0%, and the unemployment rate climbing to 4.5% by the end of the year. The firm increased the probability of a recession within 12 months to 35% and expects the Federal Reserve to cut rates three times in the second half of the year to address growth pressures. Goldman Sachs analysts noted, "Consumer and business sentiment is weak, and the economy is entering a fragile phase, with the impact of policy risks greater than in recent years."

Galaxy Research: Crypto Market Still Has Potential

Galaxy Research predicts that Bitcoin could reach $185,000 in 2025, with Ethereum exceeding $5,500, provided that the regulatory environment improves and institutional adoption deepens. Analyst Alex Thorn believes, "Short-term volatility is inevitable, but in the long run, Bitcoin will outperform the S&P 500 and gold." The firm also expects that the assets under management for U.S. Bitcoin ETFs will exceed $250 billion by the end of 2025.

InvestingHaven: Technical Support and Risks Coexist

InvestingHaven analyst Taki Tsaklanos stated that the long-term bullish pattern for Bitcoin remains unchanged, with $77,000 as a key support level; if it holds, a rebound may occur in May. However, if it breaks below, it could test $70,000. Analysts warn, "The market must respect the 50% Fibonacci retracement level; otherwise, bullish expectations will be invalidated."

Bloomberg and Evercore ISI: Short-Term Volatility Intensifies

Bloomberg strategist Mike McGlone believes, "The high correlation between Bitcoin and the Nasdaq 100 makes it more like a high-beta asset, which may follow U.S. stocks further down in the short term." Matthew Aks from Evercore ISI pointed out, "The tariff announcement on April 2 is an important milestone, but uncertainty will not be eliminated all at once; the market must be wary of the chain reaction of retaliatory tariffs."

Summary and Future Trends

The recent "Black Friday" and the cryptocurrency weekend plunge are the results of macroeconomic pressures, policy uncertainties, capital flows, and intrinsic market risks working together. In the short term, the announcement of the tariff policy on April 2 will be a key turning point; if the measures are severe and trigger global trade frictions, Bitcoin may fall below $80,000, and U.S. stocks could further decline. However, the expected rate cuts from Goldman Sachs and the institutional adoption mentioned by Galaxy Research may inject momentum for a market rebound.

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