Trump Signs Crypto Executive Order
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Price Update
Global Markets - Key Events
Last week, the S&P 500 rallied 1.7%, driven by optimism over President Trump’s economic agenda, including tax cuts and a softer tone on China tariffs. The U.S. dollar tumbled 1.8% for its largest weekly drop since November 2023, while China’s markets surged, with the CSI 300 up 0.8% and the yuan strengthening to 7.239 offshore.
Oil prices stabilised after earlier declines, with U.S. crude at $74.66 per barrel and Brent crude rising 0.3% to $78.50, following Trump’s push for lower prices from OPEC. In a notable shift, the Bank of Japan raised interest rates to 0.5%, the highest since 2008.
However, uncertainty looms as investors worry Trump’s proposed tariffs could spark inflation and delay Fed rate cuts. While tariffs on Mexico, Canada, China, and the EU could be announced by Feb. 1, analysts anticipate larger moves by April 1.
This week, attention shifts to the Federal Reserve and European Central Bank meetings. While the Fed is expected to hold rates steady, markets are watching closely for how central banks will react to Trump’s early economic actions.
Malaysia Markets - Key Events
In this environment, the Ringgit strengthened 2.86% against the US Dollar to end the week at 4.375 (a level not seen since November 2024).
KLCI made a partial recovery after a few weeks of losses on the trot, gaining +0.45% in Week 4 on 1,573.73 points. This represents a reprieve against the foreign selling that has dominated 2025 thus far.
Bond markets saw a unique recovery, mostly predicated on shorter tenures:
Business as usual: the corporate segment outperforms the government bond space due to their inherently higher yields attracting investors seeking a yield pickup.
By way of economic releases, Malaysia’s trade statistics for 2024 showed a 5.7% year-on-year jump in exports (RM1.51 trillion) and a 13.2% jump in imports (RM1.37 trillion). This also marked the 25th consecutive year of trade surpluses at RM136.88bn. Total trade notched a new historical record at RM2.88 trillion, growing 9.2% year-on-year. The growth in exports was unsurprisingly driven by electrical and electronic goods, a segment that also recorded all-time high volumes in 2024.
Crypto Market - Key Events
Last Thursday, President Trump took a major step for crypto in the US by signing an executive order aimed at creating a more crypto-friendly environment. The order tasks his administration with developing supportive policies and even exploring the idea of a “digital asset stockpile”—a bold move that could reshape how the U.S. approaches digital assets.
Bitcoin reacted immediately, spiking to $106,000 from $103,000 after the news broke. However, the gains didn’t hold for long, with Bitcoin settling at $103,500, down 0.51% in the last 24 hours. The market’s quick response shows just how closely investors are watching these developments.
Earlier in the week, the SEC made waves by announcing a new “crypto task force” led by Commissioner Hester Peirce, better known as “Crypto Mom.” She’s been a vocal advocate for crypto innovation, and her leadership signals a move toward creating rules that help the industry grow instead of holding it back.
In another surprising twist, Ross Ulbricht, the creator of Silk Road, was released after spending a decade behind bars. His release was a promise from Trump’s crypto team, showing they’re serious about tackling past controversies in the space.
Through all this, Bitcoin has stayed resilient, holding above $105,000 even as the Bank of Japan raised interest rates to their highest level in 17 years. It’s a sign that the crypto market is maturing and gaining confidence in its long-term future, despite all the noise.
What We Are Monitoring For The Week Ahead
Looking Ahead: Our Insights
With Trump’s first week in office over, markets are breathing a sigh of relief that he has not overturned the bullish expectations that he had set from November. While the pace of executive orders and tariff related decisions have been swift, they have been well communicated in advance and have not come as a surprise, unlike during Trump 1.0. This could be attributed partly because Trump has more experience in government this time around, but also because he has been very? well prepared to transition into power this time, having surrounded himself with competent technocrat advisors and preparing policy measures via his transition team.
This time around, FX volatility is front and centre to the macro landscape. The Dollar sold off heavily on Monday as the WSJ reported that tariffs would not be a day 1 measure, though Trump’s subsequent announcement on Tuesday to impose 25% tariffs on Canada and Mexico swung both the CAD and MXN sharply, only for those moves to retrace as expectations surfaced for those to be phased in. Similarly, USDCNY/CNH traded heavy on Monday, and though the 10% tariffs on fentanyl pushed the pair higher midweek, Trump’s comments on Friday was also the catalyst for another break lower in USD/CNH below 7.25.
In tandem, emerging Asia currencies strengthened against the Dollar on Friday, including the Ringgit which had a clean slice through the 4.43 support level and closed at 4.3775 (after making a low at 4.36). Momentum should carry USD/MYR lower into the 4.33/4.35 range from here next week, though that might not last. Potential Trump related volatility aside, traders wouldn’t want to carry USD shorts into the Chinese New Year holiday, which covers both FOMC and US GDP events.
The Fed’s forward guidance remains unreliable, as the stance continues to be ‘data dependent’ and the committee looks more split now after Christopher Waller’s remarks. Market expectations for rate pricing have not changed substantially into the print. Should the Fed’s focus continue to be on inflation though, it isn’t likely that we can expect anything too dovish from Powell. Despite the last CPI print coming in line with surveys, thinking has shifted towards the possibility that inflation has bottomed out. Between yields and the dollar, investors should remain focused on how the Fed will keep a lid on volatility in these two areas, as a spiral in either would lead to disorder in risk assets.
US large cap equities enjoyed upward momentum this week, but the same could not be said for cryptocurrencies. Though Bitcoin made a new all time high ahead of Trump’s inauguration speech, and also during Cynthia Lummis’ ‘teaser’ tweet on Thursday, all of these moves have really been predicated on one thing: the expectation for the announcement of the US’ strategic Bitcoin reserve. As none have been forthcoming, Bitcoin rapidly retraced those price moves.
Reading into the latest executive orders signed, the White House’s cryptocurrency working group would need at least 6 months of study before any strategic digital asset reserve (yes, not just Bitcoin) would be formed. On crypto twitter, that might as well be another cycle altogether, as everyone wants it to come NOW. In that sense, sentiment remains in limbo, and can’t be counted upon to push prices higher. Indeed, Friday’s NY close saw large swaths of pullbacks in movers across the board, especially memecoins like $TRUMP and $GOAT.
Given the focus on this driver, US equity upside likely decouples away from crypto, though unfortunately downside moves on macro drivers could remain correlated. The expectation would be for crypto majors to chop around in the current ranges, with a bias towards retracing any upward moves (especially those that have been momentum/sentiment driven).
For those looking towards the longer term, the developments in Ethereum could be interesting. Of late, the drama relating to the Ethereum Foundation has likely, at least in part, been a reason for the relative underperformance in ETH. If nothing else, the foundation’s selling of its ETH treasury holdings definitely has increased market supply, and attracted much vitriol from crypto twitter. Taking a glass half full view though, any steps towards resolving the recent drama should help pivot the narrative back towards ETH.
Another reason that ETH deserves some attention is that the latest round of deregulation, including the SAB 121 repeal, should give hopes that at some point in the near future, the spot Ether ETFs will be allowed to stake their ETH holdings. This would allow ETH ETFs to finally have a different value proposition from the BTC ETFs to institutional investors. While we have no crystal ball to tell the future, this seems like a reasonable bet.?
If nothing else, Trump’s WLFI project has heavily invested in both ETH and DeFi ecosystem tokens, which should at least help maintain a floor on prices.
Thank you for reading and we’ll see you next week!
Team Halogen???????????????????????????
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