Crypto Bloodbath: Bitcoin Plummets 12%, Altcoins Like XRP and Pepe Get Obliterated

May 1, 2025 - The crypto market just took a brutal hit, with Bitcoin crashing below $50K and altcoins bleeding out. Here’s why the knives are out.

The Fed Effect: Liquidity Vampires Strike Again

Risk assets got hammered after Powell’s ’higher for longer’ speech - because nothing says ’healthy economy’ like rate hikes during a recession.

Altcoin Carnage: Meme Coins Hit Hardest

Speculative plays like Pepe got decimated (down 40%), while ’utility’ tokens like VeChain and XRP proved just as vulnerable to market forces.

Whale Games: Big Players Cashing Out

On-chain data shows massive BTC transfers to exchanges - because when the going gets tough, the tough dump on retail.

This isn’t your first crypto winter... and it won’t be your last. The only question is who’s still holding bags when the music stops.

US economy shrank in Q1

The drop across risk assets followed the release of multiple weak economic indicators. A report showed that the private sector added just 62,000 jobs in April — well below the average estimate of 114,000 and a steep decline from March’s 147,000.

Another report revealed that the U.S. economy contracted in the first quarter, shrinking by 0.3%. This marked a sharp reversal from the 2.4% expansion seen in Q4 of last year.

Inflation also remained stubbornly above the Federal Reserve’s 2.0% target. The closely watched Personal Consumption Expenditure (PCE) index slowed to 2.3% in March, still slightly higher than the expected 2.2%.

These figures followed a report from the Conference Board, which showed consumer confidence had plunged to its lowest level in years.

As a result, Bitcoin and most altcoins, including Pepe, VeChain, and XRP, fell as investors increasingly predicted a looming U.S. recession. In a statement, Mark Zandi, the senior economist at Moody’s, warned that the economy was on the precipice of a recession.

The decline in GDP in the 1st quarter overstates the economy’s weakness, but it is weak. The threat of tariffs and Doge cuts weighed heavily on the economy in the quarter. Most worrisome is the weak growth in consumer spending, and that is despite the boost to buying as consumers…

They also declined after Trump insisted that his tariffs on most goods would go on. In a TruthSocial post, he stated that tariffs would soon begin to take effect. This statement mirrored what he told the Times that he would declare total victory if the US had high tariffs on foreign imports.

Silver lining for Bitcoin and altcoins

On the positive side, higher tariffs on imports may lead to a recession in the US as Mark Zandi predicts. A recession would lead to lower consumer spending and help reduce inflation.

More importantly, if the Federal Reserve responds by cutting interest rates, Bitcoin and other altcoins may benefit. This also explains why U.S. bond yields dropped following the GDP data.

Historically, cryptocurrency prices have rallied when the Fed enters a rate-cutting cycle. For example, Bitcoin and most altcoins surged during the pandemic as the Fed slashed rates to zero and implemented aggressive quantitative easing.