We are witnessing unprecedented events that are exhausting market participants. A phenomenon not seen in years is re-emerging for the U.S. economy. With Trump’s new presidential term, the rapidly changing global economic landscape raises questions about what it means for cryptocurrencies moving forward.
The U.S. Economy and Cryptocurrencies
This week’s CPI and PPI data were extremely supportive. However, we will begin to see the inflationary effects of Trump’s tariffs in March, especially when the tariffs are fully implemented in April. This suggests that investors should be cautious regarding data to be released in May.
The Kobeissi Letter indirectly addressed this issue, sharing a graphic and commenting on long-term inflation expectations in the U.S., which have risen to +3.9%, the highest level since 1993. One-year inflation expectations also climbed to +4.9%, indicating consumers are bracing for significant price increases. The Umich survey shows a decline in sentiment among both Democrats and Republicans, with inflation expectations having risen steadily since the trade war began.
Bitcoin (BTC)
As the weekend approaches, BTC price has returned to $85,000 despite weakening volumes. However, without reclaiming the $86,000 threshold, discussing a comeback seems challenging. The importance of maintaining the 200-day average cannot be overstated.
Kyle warns of a greater risk of decline, noting that a significant liquidation cluster could push prices down. If BTC revisits $76,000, we might witness a massive liquidity sweep of $3 billion.
While U.S. stocks have somewhat recovered, Trump’s upcoming remarks at the Department of Justice could reverse the situation. Perhaps the market has already priced in this absurdity and remains indifferent?