Markets staged a broad-based rebound this week, lifted by a temporary reprieve on tariffs and continued digestion of last week’s dovish Fed. BTC appears well-supported in this environment, aided by steady ETF inflows and a slight softening in trade rhetoric. However, that resilience is being tested by this week’s liquidity headwinds. The Fed’s reverse repo facility (RRP) has climbed this week now just over USD 290 billion and is likely to rise further as banks park cash for quarter-end window dressing. With April 2 on the horizon, traders remain cautious.
Still, the balance of risks may be shifting. If macro overhangs clear, and liquidity normalizes, BTC could break higher into next week.
Macro: Trade Risk Takes Centre Stage
While last week’s dovish Fed meeting set the tone, this week was dominated by trade headlines. Early signals suggested the White House would pursue more targeted, reciprocal measures as part of its April 2nd package — helping to steady market sentiment. But that tone shifted midweek, when President Trump formally announced a 25% tariff on auto imports, escalating tensions with major trading partners. Markets sold off into the headline — and crypto followed.
Political risk remains front and centre. Until there is clarity on trade policy, we expect markets to trade tactically and with limited conviction. April 2 is the next inflection point.
Crypto: Low Vol, Flat Flows, Big Expiry
Crypto tracked broader risk higher to start the week, with BTC briefly pushing above USD 88,000 and ETH above USD 2,000 before fading as trade tensions resurfaced and month- and quarter-end flows contributed to choppy price action. Volatility has remained subdued throughout the week, with both BTC and ETH implieds drifting lower. Today’s significant options expiry adds a layer of event-driven tension. With 139,000 BTC contracts (notional USD 12.1 billion) and 301,000 ETH contracts (notional USD 2.13 billion) set to roll off, choppy trading may persist into the weekend.
Looking Ahead: April 2 & Month/Quarter-End Set the Stage
With both today’s PCE print and a major options expiry on deck, markets are bracing for elevated event risk into the weekend. But the real focal point now is April 2, when Trump is expected to announce the next phase of trade measures. Whether the policy tone leans targeted or escalatory will be key in shaping risk sentiment as we move into the new month.
Key things to watch:
- April 2 trade headlines: any escalation could reprice risk fast.
- RRP & liquidity pressure into March 31.
- Dollar strength on hedge-driven rebalancing.
- ETF flows as a proxy for institutional conviction.
Markets remain volatile into month- and quarter-end, with flows around portfolio rebalancing and balance sheet management adding to the chop. Macro uncertainty continues to suppress conviction — but beneath the surface, conditions are quietly shifting. With the bulk of negative catalysts likely behind us and financial conditions easing through a softer dollar, lower yields, and a slower pace of QT, the backdrop for risk assets is beginning to improve. It may not feel like it yet, but the foundation is being laid. This kind of tension doesn’t last forever — and when it breaks, the move won’t be small.
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