Market Update: Tariffs, Trade Shifts & Bitcoin's Next MoveCME:BTC1!
News and Economic Calendar Update
President Trump announced 25% tariffs on all steel and aluminum imports, effective Monday, with reciprocal tariffs to follow on Tuesday or Wednesday. As Trump has shared, “if they tax us, we tax them the same amount.” This move is expected to reshape global trade relations, with China reportedly considering probes into U.S. tech firms such as Broadcom (AVGO) and Synopsys (SNPS), according to WSJ. Japan's PM Ishiba remains optimistic about avoiding higher U.S. tariffs, while Australia and India are negotiating exemptions and trade concessions. Meanwhile, the EU has hinted at retaliatory measures should new tariffs be imposed.
The U.S. dollar strengthened following Friday’s jobs report and fresh tariff announcements, while the Japanese yen under-performed. The EUR/USD briefly dipped below 1.03 before rebounding, and the British pound remained stable ahead of comments from BoE’s Mann. U.S. Treasury yields were unchanged, while European bunds edged higher amid rising trade concerns.
Gold surged to an all-time high above $2,900/oz, reflecting increased demand for safe-haven assets due to tariff uncertainty. Meanwhile, crude oil reached session highs, and European natural gas prices climbed to a two-year peak due to colder temperatures and tight storage.
Looking Ahead
Key upcoming data releases include Fed Chair Powell’s testimony, U.S. CPI data, Chinese M2 Money Supply, and U.S. retail sales. Additionally, multiple central bank officials are scheduled to speak throughout the week, providing further insights into monetary policy direction.
Macro Update: Trade War 2.0 and Tariff Shifts Impact Markets.
The latest reciprocal tariff announcements from Trump, in our view, presents a strategic opportunity for the U.S. This approach enables negotiations for lower tariffs on U.S. exports with individual trading partners, fostering a more flexible and targeted trade policy. This shift aligns more with global trade integration and could provide a more balanced framework for U.S. exporters.
Gold continues to exhibit renewed strength as a safe-haven asset, marking fresh all-time highs amid market uncertainty. Meanwhile, Bitcoin—often referred to as "digital gold"—has lagged behind, struggling in a climate of risk-off sentiment. However, it remains within its post-election trading range, signaling resilience despite broader market volatility.
At the fiscal level, U.S. House Republican leaders are proposing federal spending cuts ranging between $2 trillion to $2.5 trillion, according to Punchbowl sources. These cuts are expected to focus heavily on Medicaid spending. However, the effectiveness of government spending adjustments remains in question—whether such measures will enhance efficiency or simply reduce overall spending is yet to be seen. In addition, extending President Trump’s tax proposals could cut revenue by $5-11T over a decade, potentially pushing U.S. debt to 132-149% of GDP by 2035. Senate Republicans propose $342B in border and defense spending, with offsetting cuts. Meanwhile, Musk’s DOGE Service aims to automate government functions, reduce the federal workforce, and slash spending.
Bitcoin Big Picture:
Bitcoin has been consolidating after making new all time highs post US elections. Although price action and consolidation points towards further bullishness. We remain cautious and prepared for any of the scenarios that may happen as a result of many different factors influencing risk assets and market sentiment.
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Key Levels to Watch
Key levels represent areas of interest and zones of active market participation. The more significant a key level, the closer we monitor it for potential reactions and trade setups in alignment with our trading plan.
Yearly Hi: 110,920
mCVAH: 104,400
Dec 2024 mid range: 101,570
Jan 2025 mid range: 100,610
mCVPOC: 98,075
mCVAL: 93,730
Key Bull Support: 92,505 - 90,000
Scenario 1: Further chop and acceptance
In this scenario, we may see price action remain range bound. Traders look for clarity on how policy may affect market sentiment before further committing capital.
Scenario 2: New ATHs
Price attempts to create new ATHs which marks a significant move. Although bitcoin created new all time highs in January 2025, these were rejected and price action pointed towards market top.
Scenario 3: Souring market sentiment
Scenario 2 and 3 requires remaining alert to all developments as fundamental and macro news is turning ever so significant in driving short-term volatility and price action.
Any further hint towards tighter monetary policy and tighter fiscal policy may send BTC prices lower very quickly.
