Week-over-week performance:
- BTCUSD: 79,394 / -3.8%
- ETHUSD: 1,577 / -13.45% (!!)
- US10Y: 4.17% / -4 bps
- DXY: 102.9 / -1.23% (!)
- GOLD (USD/OZ): 3,008 / -3.68%
- SPX: 5,062 / -8.01% (!)
- NDX: 17,430 / -9.59% (!!)
- DVOL: 54.8 / +7.03%
- VIX: 46.97 / +110% (!!!)
Looking ahead – economic calendar:
- Tuesday, 08 April 2025: Paris Blockchain week starts
- Wednesday, 09 April 2025: FOMC minutes, Reciprocal tariffs take effect
- Thursday, 10 April 2025: CNY CPI, CNY PPI, US CPI, US Jobless claims
- Friday, 11 April 2025: US PPI, Earnings: $JPM, $BLK, $WFC, $MS
- Saturday, 12 April 2025: $AXS Unlocks 5.67% MC ($22M)
On the macro side:
It has been a tough week.
The S&P 500 broke below the psychological 5000 level for the first time since April 2024, dropping as low as 4834 before recovering back above the threshold. Similarly, the Nasdaq 100 revisited the 17,000 mark, while the cash VIX briefly spiked to 60 before settling in the mid-40s.
On the marter, we have observed a notable surge in demand for leveraged products. TQQQ, for instance, saw daily volumes comparable to those during the 2022 market bottom and the March 2020 COVID crash. Is this a bounce or just the beginning? In line with this sentiment, demand for short-volatility products has also sharply increased.
Chart 1: TQQQ 1d + Volume
Treasury yields have pulled back, though not to the extent one might expect in this kind of environment. Likewise, the option-adjusted spread on CCC & lower-rated US high-yield bonds is elevated at 11%, but still below the 12%+ levels seen throughout COVID and in the 2022 until early 2023 period.
Chart 2: CCC & lower US High Yield Index Option-adjusted spread vs SPX
The VVIX is currently at 152, while COR3M sits at 43. Under typical market conditions, these levels would signal a local bottom. However, I believe we’re entering a new regime– one marked by persistently high volatility-of-volatility and a breakdown in traditional diversification benefits. In this environment, the value of conventional diversification erodes, prompting a shift in focus toward high-quality assets as the global economy continues to fragment. I expect historically lower volatility assets to outperform in this new landscape.
Chart 3: SPX vs VIX, VVIX and COR3M
What surprises me is the market’s timing. Trump has long telegraphed these moves– his campaign was built around this narrative. While the actual average tariff rate of nearly +20% exceeds expectations (consensus was closer to +10%), I’m curious to see how this will ultimately affect the US economy.
The key risk here, in my view, is that tariff-driven inflationary pressure could outpace the effects of monetary and fiscal tightening– potentially weakening the USD and sending markets into a “death spiral.” This is the moment for Powell to step up. The Fed’s balance sheet stands at USD 6.7 trillion, but in this environment, things can change very quickly.
Looking ahead, I do not expect the market to be overly reactive to economic data. Instead, political headlines are likely to drive sentiment.
Expecting erratic moves.
On the crypto side:
Bitcoin (BTC) largely weathered the storm. While it briefly dipped below the psychological USD 80,000 mark, the local bottom formed at USD 74,400. Despite the volatility, BTC ended the week with a relative performance similar to that of Gold. To me, this continues to reflect the rotation out of altcoins and into Bitcoin, with Ethereum (ETH) taking the biggest hit– down another 13%, ETHBTC breaking below 0.02, and bitcoin dominance rising to 63.56%. I continue to expect BTC dominance to trend higher.
Chart 4: BTC.D 1D
In the derivatives market, demand for protection remains elevated– puts are still rich– yet the term structure shows no signs of a major risk event. This is likely due to the presence of new market participants with strong balance sheets, willing to sell into any uptick.
As mentioned above, I continue to see value in accumulators at these levels.
Broadly speaking, crypto still feels like it’s lagging. If equities are trading at April 2024 levels, bitcoin is still back at September levels. The narrative of BTC as the “last asset standing” is certainly helping– SOLUSD is trading at February 2024 levels, and ETHUSD… well, no comment needed there.
Where I see the most downside right now is XRPUSD, even as the US prepares for the launch of a 2x swap-based ETF. Teucrium Is Launching Leveraged ETF Linked to Cryptocurrency XRP – Bloomberg. This, in my honest opinion, is a rather strange development. On the other hand, XRPUSD is still trading at Dec-2024 levels, too high to me. We believe relative value strategies are likely to outperform here.
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