Key Headlines This Week:
- China retaliates with counter-tariffs; Trump cancels the Xi call
- AI & Crypto Czar Sacks’ press conference disappoints
- SEC downsizes its crypto enforcement unit
- JOLTS job openings drop to a 3-month low amid rising jobless claims
- Trump signs an executive order to create a US sovereign wealth fund
- Treasury Secretary Bessent reaffirmed the administration’s goal to lower 10-year yields
- Bank of England cuts rates by 25 bps, signalling more to come by year-end
This week showcased classic Trump-era market dynamics: tariff escalations, abrupt reversals, and relentless headline-driven volatility. Crypto once again found itself at the mercy of macro forces, but BTC’s ability to hold above USD 90,000 despite systemic uncertainty underscores its long-term resilience.
In this week’s Market Deep Dive, we break down the key drivers behind the chaos and what is next for crypto and macro markets. The week kicked off with a full-blown trade war, as Trump’s tariffs on Mexico, Canada, and China—confirmed last weekend—sent shockwaves through the global markets.
With TradFi closed for the weekend, crypto was the only market open, absorbing the brunt of the risk-off move. BTC plunged to USD 91,000, while XRP and ETH shed over 20% within 24 hours. A strengthening USD and rising yields fuelled the sell-off as fears of inflationary pressure and economic retaliation took centre stage.
Adding to the pain, Canada struck back with a 25% tariff on a range of US imports, setting the stage for further escalation. The fallout was brutal in the crypto markets, with a liquidation cascade wiping out over 450,000 traders, pushing total liquidations beyond USD 1.8 billion—one of the largest in recent history.
As expected, we did not have to wait too long for Trump’s playbook of strategic reversals to come into action. Markets were given a brief reprieve as news broke of a one-month delay to U.S. tariffs on Mexico and Canada – sparking a BTC rally back above USD 100,000.
However, this relief was short-lived. China retaliated with new tariffs and further escalated tensions by launching an antitrust investigation into Google, signalling a shift beyond trade into broader economic warfare. The risk-on bounce evaporated, sending BTC firmly back below USD 100,000 and dragging broader crypto markets back towards the week’s lows.
Adding to the volatility, Trump signed an executive order directing the Treasury and Commerce Departments to create a US sovereign wealth fund. While the details remain unclear, the move raised speculation that such a fund could eventually buy and hold bitcoin.
Hopes for further regulatory clarity were dashed after Crypto Czar David Sacks’ much-hyped press conference delivered little more than a vague commitment to future discussions. Instead, a task force was set up to explore stablecoin legislation, and a working group was formed to evaluate a Strategic Bitcoin Reserve (SBR) – a long-term positive, but one with no immediate impact.
After a rollercoaster start to the week, we are seeing signs of a shift in risk sentiment:
- DXY is off its highs (-0.5% on the week)
- Crypto and equity markets stabilise
- US Treasuries remain bid, with 10-year yields holding below 4.5% – a potential tailwind for BTC
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