Bitcoin April 2025 Update

Market Commentary

The Federal Reserve's preferred inflation gauge, the personal consumption expenditures (PCE) price index, rose less than 0.1% month-over-month in March, bringing the 12-month rate down to 2.3% from 2.7% in February. Core PCE inflation, which excludes food and energy, also cooled to 2.6% year-over-year, down from 3.0%. Despite moderation in goods prices, services inflation remains persistent, especially in areas like medical care and shelter. Shelter costs in particular continued to rise and contributed notably to monthly price pressures. Meanwhile, egg prices have remained volatile due to ongoing avian flu disruptions, though food inflation has eased overall. Consumer spending increased by 0.7% in March, led by gains in both goods and services, but consumer confidence declined for the fifth straight month in April, hitting its lowest point since May 2020.

Federal Reserve Chair Jerome Powell noted that unexpectedly high tariffs pose new risks to inflation and could have a greater-than-anticipated impact on economic growth. The labor market added 177K jobs in April—beating expectations—while the unemployment rate held steady at 4.2%. Sectors such as healthcare, transportation, and social assistance saw gains, while federal government jobs fell. Although GDP contracted at an annualized rate of 0.3% in Q1, underlying demand appeared strong, with private domestic final sales rising 3.0%. As of April 2025, the probability of a rate cut in May is just 3%, while a June cut stands ten times higher at 30%. Markets are pricing in a 75% chance of at least two cuts by year-end, as the Fed weighs mixed signals from inflation, spending, and employment.

Early in April 2025, BTC and US equities were moving in close sync, with rolling 10-day correlations above 0.7, but this relationship dropped in the second half. Its correlation to risk assets dropped as it rose during the stretch, while equity indices remained flat. Toward the end of the month, as US markets rose, BTC’s correlation with SPY and QQQ strengthened again, reflecting a brief reconnection during broad market strength. Overall, April highlighted BTC’s ability to both align with and diverge from traditional assets, depending on market conditions and asset-specific catalysts. Below we show the 10-day rolling correlation between the NASDAQ QQQ ETF, S&P500 SPY ETF, and BTC over the last ninety days.

Historically, April has been a positive month for BTC, with an average return of +13% and a median of +7.3%. April 2025 didn’t break the trend as BTC recorded a +14% increase, reversing two months of price declines. May is usually a quieter month for BTC, but this “cycle” doesn’t seem to match historical trends.