The cryptocurrency market has stabilized, driven by recent economic and geopolitical developments. Commerce Minister Howard Lutnick announced that President Donald Trump may unveil a plan on Wednesday to ease tariffs on Canadian and Mexican imports under NAFTA, boosting market confidence. This expectation has lifted Bitcoin (BTC) to near $90,000, raising the total crypto market cap to approximately $2.9 trillion. The anticipation of trade relief has also rekindled speculation of Federal Reserve (Fed) interest rate cuts, further encouraging investor optimism.
Market indicators reflect this shift. The CME’s FedWatch tool shows traders now expect at least three rate cuts this year. Simultaneously, the 10-year Treasury yield has dropped to 4.15%, down from 4.80% at the beginning of Trump’s presidency. In Europe, Germany’s decision to relax fiscal constraints has caused bond yields to surge, prompting a sell-off in the dollar index. A weaker dollar often promotes risk-taking, potentially enabling Bitcoin to test its recent high of $95,000, particularly as technical indicators show signs of seller exhaustion.
Despite these gains, economic concerns persist. The Atlanta Fed’s latest GDP forecast dropped to -2.8%, raising fears of stagflation. Singapore-based QCP Capital highlights the need to monitor corporate bond yield spreads—both high-yield and investment-grade—against U.S. Treasury yields for early signs of market distress. While the situation hasn’t triggered panic, it remains a crucial trend to observe.
A key question is how much of the drop in the 10-year yield and dollar weakness stems from shifting perceptions of U.S. economic exceptionalism, once fueled by Biden-era fiscal policies. With the rise of Exchange-Traded Funds (ETFs) and Trump’s pro-crypto stance, Bitcoin has increasingly become a U.S.-centric asset. Any change in the U.S. exceptionalism narrative could heighten BTC volatility. However, JPMorgan expects a reinforcement of U.S. economic strength under Trump’s administration.
Upcoming reports, including Wednesday’s ISM non-manufacturing PMI and Friday’s nonfarm payrolls, could heavily impact crypto markets. Additionally, rumors suggest Trump may reveal a crypto reserve strategy at the White House Crypto Summit this Friday. Given his promises, market participants will be closely watching. If expectations fall short, turbulence could follow. Stay alert.
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