Alpha Traders Digest

TL;DR

• Tariff tensions dampen markets as high beta assets plunge.
• Correction fears reach fever pitch as BTC put-call ratio surges and traders hedge holdings.
• Proposed US crypto strategic reserve includes XRP, SOL, and ADA, providing optimism.
• Proposed MEME Act bill plans to clamp down on memecoin mania.
• Macroeconomic announcements to cause further volatility.

Market pulse

• BTC trend status: bearish momentum due to range bound channel breakout to the downside.
• Next notable level (former resistance) at 73,600-71,500 dates back to March 2024.
• Potential recession concerns adding panic and fear.

Bitcoin has broken out of its post-elections range. The latest bearish engulfing candle could signal a potential shift in momentum, indicating a surge in selling pressure and a possible continuation of the downtrend. As BTC trades lower, traders are watching price-action at the March 2024 former resistance (73,600-71,500). Will former resistance become the next new support?

Market dynamics and developments

• Tariff turmoil: As global tariff tensions escalate, bearish sentiment for risk-on assets like crypto continues to rise as emotion-driven sell-offs move the market. With the first of many reciprocal trade tariffs coming into play, the immediate impact is a contraction in international trade volumes and supply chains, which results in increased costs. Consequently, market confidence weakens amid such volatility and a flight to perceived safe haven assets like gold and the US dollar becomes more pronounced.
• To hedge or not to hedge: As BTC’s put-call ratio surges to 0.8-1.04 YTD, this signals heightened demand for downside protection amid volatility as traders remain on edge. This suggests that much of the post-U.S. election optimism seems to have faded since more traders are opting to hedge and take on a more risk-averse approach.
• Crypto reserve optimism: Beyond BTC and ETH; XRP, SOL, and ADA see renewed interest following their inclusion in the proposed U.S. strategic crypto reserve. As a spark amid the doom and gloom present in the current market sentiment, all eyes will be on the execution of the strategic reserve and how the current U.S. administration will fulfill its crypto capital ambitions.
• MEME act takes aim at TRUMP: A proposed Modern Emoluments and Malfeasance Enforcement Act bill aims to curb memecoin speculation, sparking debate about presidential memecoins like TRUMP and LIBRA. While the SEC has responded with a statement on how memecoins aren't securities, the debate on legitimacy of presidential memecoins is surely far from over.
• Macro reports to grant clarity: Is the existing panic justified? With February's Consumer Price Index and jobs data numbers looming on the horizon, we can expect plenty of volatility this week as the data paints a clearer picture of how healthy the current economy is.

Worth watching: tit-for-tat tariffs

Are tariffs priced in? Will retailatory tariffs spread? The market's ability to absorb shocks depends on the perceived severity and duration of trade disputes. Protection contagion may stimulate reciprocal tariff trade wars, dampening international trade and raising the costs of goods. Higher costs lead to inflation, resulting in rate rises, slowing appetite for risk assets like crypto.

More: How tariffs affect crypto prices.

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