Market Deep Dive: All Bark, No Breakout

The week began with risk on the ropes, rattled by Trump’s latest tariff theatrics but regained poise as the bluster gave way to yet another walk-back. In classic TACO fashion, Trump threatened sweeping import duties; 10% from February 1, rising to 25% by June, targeting eight European nations for opposing U.S. claims to Greenland, only to reverse course days later. 

Citing a vague “framework of a future deal” with NATO allies, Trump backed down without offering specifics. The message was clear: maximum noise, minimal follow-through. 

Markets have learned to fade the bluster. Equities bounced back into the close and precious metals continue to shine more than ever with USD 100/oz silver and USD 5,000/oz gold coming into view. 

Crypto, meanwhile, barely blinked – BTC once again failed to hold above 90,000. Volatility is subdued, conviction even more so. And while the macro picture remains supportive, crypto is still waiting for its cue.

Macro: Tokyo, Not Tariffs

While geopolitical theatrics grabbed the headlines, the more important story has been quietly unfolding in Japan. Markets are digesting the rising likelihood of a snap election in early February, driven by Prime Minister Takaichi’s attempt to secure a stronger mandate for fiscal expansion. The headlines triggered a sharp sell-off in both JGBs and yen, prompting verbal interventions from Japanese officials- and even support from U.S. Treasury Secretary Scott Bessent. 

With debt nearing 250% of GDP, and yields hitting levels not seen in decades. the BoJ is caught between saving the bond market and protecting the currency. As always, the currency loses. 

This is the classic endgame for debt-heavy, zero-rate economies: 

• Bond yields rise faster than the central bank can manage
• Currency depreciation accelerates
• Intervention becomes increasingly verbal – until it can’t be

If the BoJ is forced into larger-scale yield curve control, global liquidity conditions will shift. The implications extend well beyond Tokyo – and crypto will feel it, one way or another. 

Crypto: Still No Love

Bitcoin spent the week slipping back after failing to clear the widely watched 98,000 level – a rejection that felt more mechanical than emotional. Price action has since settled into the low 90s, with neither buyers nor sellers showing much urgency. 

ETF flows underline the hesitation. After last week’s optimism, momentum reversed sharply, with roughly USD1.2 billion of outflows from Bitcoin ETFs so far this week. Ethereum followed suit, seeing around USD 559 million of net outflows, reinforcing the broader lack of conviction across the space. 

Yet beneath the surface, the market structure continues to improve. Crypto is moving on from last year’s forced deleveraging into a more stable phase – one defined by cleaner positioning and slower, more deliberate flows. What is absent is a trigger, not a base. 

Directionless for now. But not disengaged.

Looking Ahead: Fed on Deck, BTC Needs a Spark

Next week’s FOMC meeting is unlikely to deliver surprises. Markets are firmly positioned for a hold (pricing now at 95% probability), and the bar for any hawkish shift is high. Inflation is easing, growth remains intact, and the labour market continues to soften at the margins. For now, monetary policy is on pause and fiscal policy is doing the work. 

That leaves two variables to watch. 

The first is Japan. Any further acceleration in JGB volatility risks spilling into global rates, and while this week’s move was contained with yields coming off this week’s highs, the direction of travel bears watching. The response from policymakers will matter more than the headlines. 

The second is positioning. Crypto remains under-owned, under-loved, and tightly range-bound. For BTC, the near-term map is simple: support around the mid 80s, resistance around USD 98,000. Until one of those breaks, the market is likely to remain reactive rather than decisive.

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