Market Outlook: Powell's Rate Cut Decision Takes Center Stage Amid Earnings Reports

By Francisco Rodrigues (All times ET unless indicated otherwise) The effects of President Donald Trump's reciprocal tariffs are becoming increasingly evident, with the U.S. economy experiencing its first contraction in three years and stocks posting their worst 100-day performance under a presidential administration since 1974. Trading platform Robinhood's results showed a cooling market in the first quarter, despite beating analyst forecasts for revenue and earnings per share. Notably, Robinhood's crypto revenue doubled year-over-year, potentially setting the stage for similar performances from Block, Riot Platforms, Strategy, and Reddit, which are set to report their results after the market close. According to James Butterfill, head of research at CoinShares, the recent wave of weak macroeconomic data points to both recessionary risks and rising inflation. However, bitcoin has demonstrated remarkable resilience, outperforming the Nasdaq by 11% since April 2. While the first-quarter GDP fell 0.3% and major stock indexes posted losses in April, bitcoin held strong, rising nearly 15% against the dollar as investors increasingly turned to it as a safe-haven asset, alongside gold and the Swiss franc. Butterfill believes that risk assets are now benefiting from expectations of an earlier-than-expected interest-rate cut, with equities and bitcoin rebounding on renewed hopes of an imminent rate cut. A disappointing payroll figure on Friday could be the catalyst for more dovish policy from the Fed. In the cryptocurrency space, Ethereum's highly anticipated Pectra upgrade is set to go live on mainnet on May 7, aiming to improve the network's user experience and efficiency. This upgrade is significant, as Ethereum has been losing ground to more efficient blockchains like Solana, Base, and BNB Chain. According to DeFi Llama, the total value locked (TVL) on Ethereum's smart contracts grew just 4% in April, compared to 21% on Solana and 9.9% on BNB Chain. However, Ethereum recorded $880 million in net inflows in April, suggesting a potential reversal of the trend ahead of Pectra's activation. The ETH/BTC ratio has dropped to a five-year low of 0.19, indicating a significant shift in market dynamics. Key events to watch include token events, conferences, and CoinDesk's Consensus in Toronto on May 14-16.