Market Watch: Tension and Volatility

Cryptocurrency and traditional markets remained under pressure last week as geopolitical tensions and concerns over U.S. tariffs weighed on investor sentiment, prompting a shift toward safer assets like government bonds and cash. Risk assets, including the S&P 500 and Nasdaq, are trading at levels last seen in September 2024, before the so-called “Trump Pump”. Similarly, cryptocurrency markets remain subdued despite optimistic commentary from the Oval Office. 

Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) experienced outflows again last week, though at lower volumes compared to the previous week, as their correlation with equity markets remains high. The CoinGlass Greed and Fear Index has returned to “Extreme Fear” territory, reflecting cautious investor sentiment as the week begins.  Meanwhile, Bitcoin volatility climbed over 80% in March, underscoring the uncertainty in the market. 

The crypto strategic reserve and White House summit were key topics from last week. The Trump administration unveiled plans for a Strategic Bitcoin Reserve, which will be funded using BTC acquired through forfeitures rather than open-market purchases. Officials emphasized that the reserve would not add to taxpayer costs and stated that any additional purchases would be funded by “budget-neutral strategies”, underscoring a commitment to fiscal prudence.

Source: Investing.com 3/10/2025 - 11:29AM CDT

The big moves in the U.S. dollar last week were driven by a notable shift in U.S. and European interest rate expectations, a development worth highlighting. European stock markets and the euro performed strongly, bolstered by fiscal spending developments in Germany. These measures pushed Bund yields higher by 30 basis points last Wednesday.   

Germany plans to exempt military spending from its strict fiscal rules and create a 500 billion euro off-budget fund for infrastructure spending. These initiatives boosted EU economic growth expectations, helping EUR/USD rise 5% – an impressive feat, given that markets were considering the possibility of parity earlier this year. Meanwhile, ongoing U.S. tariff disputes under the Trump administration led to growing concerns about a potential negative impact on U.S. economic performance, which pushed U.S. interest rates lower. This divergence in interest rate expectations and the impact on the U.S. dollar is reflected in the chart below.  

Source: Trading View, CoinFlip 

News to Watch

Spain's Second Largest Bank Gets Green Light to Offer Bitcoin and Ether Trading: Report 

US regulator clears path for banks to engage in some crypto activities | Reuters 

El Salvador continues accumulating bitcoin and now holds 6,111 BTC despite IMF pressure | The Block 

Utah scraps bitcoin reserve provision before advancing state’s crypto bill | The Block 

US Department of Housing considers crypto and blockchain usage: ProPublica | The Block 

The Week Ahead

U.S. inflation data will be the primary macroeconomic focus for this week. 

 Source: TradingEconomics.com

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