The Crypto Rollercoaster
President Donald Trump’s tariff policies sent ripples through both the cryptocurrency and traditional financial markets, creating uncertainty and volatility. The announcement of 25% tariffs on Canada and Mexico contributed to Bitcoin dropping nearly 15% to $92,000 and Ethereum falling 27% below $2,500. However, Ethereum remarkably closed that day in the green despite the volatility.
Alt-coins took the hardest hit, some falling 40%, but markets rebounded sharply after Trump paused the tariffs with 30 day agreements. The bounce was further fuelled by news of David Sacks’ hosting a crypto conference today and news that total liquidations far exceeded the reported $2B, closer to $10B, according to Bybit’s CEO. High liquidations help flush excess leverage, reset funding rates, and create a more stable base for future price action.
Weekly Price Update
Trump’s Crypto Czar Hosts Press Conference
David Sacks, President Trump’s newly appointed AI & Crypto Czar, held a highly anticipated press conference today at 2:30 pm ET, outlining the administration’s early stance on digital assets. While expectations were high, the market reaction suggests investors were left wanting more.
Key Announcements:
- Bitcoin Reserve Exploration: Trump has directed the task force that the first thing to do is to assess the feasibility of a U.S. Bitcoin Reserve, though officials made it clear that this is still in the early stages and will take time to develop.
- Stablecoins & the Dollar: The administration sees stablecoins as a net positive for the U.S. dollar, potentially reinforcing its dominance in global markets.
- Regulatory Clarity Incoming: A dedicated crypto task force will be providing clearer regulatory guidance in the near future.
- SEC Crypto Task Force Website Launched: A new platform was introduced to streamline regulatory communications and improve industry engagement.
Market Reaction:
Despite the historic nature of a U.S. administration openly discussing a Bitcoin Reserve, the lack of immediate policy action led to disappointment among investors. Bitcoin (BTC) saw a sharp decline from its 24-hour high of $102K to $96K, triggering a broader market sell-off that impacted Ethereum (ETH) and other major digital assets.
Bitcoin Price Chart
- Following the announcement of the meeting, Bitcoin rebounded sharply from its retracement to $92K, surging back to $102K within 24 hours. However, after the conference, Bitcoin saw a sharp decline to $96K before now stabilising around $98K.
Bigger Picture:
While the market’s knee-jerk reaction was negative, this conference marks a key milestone in integrating crypto into U.S. policy discussions. The fact that a sitting president is considering a Bitcoin Reserve is a significant step forward. If this momentum continues, the long-term implications could be very bullish for the industry as the U.S. positions itself at the forefront of digital asset innovation.
Fed Holds Rates, Signals Caution on Cuts
The Fed kept rates steady at 4.25%–4.5%, pausing the "Fed Pivot" amid stalled disinflation. Powell noted progress toward 2% inflation was removed from official statements but reiterated cuts could come before reaching that target. Unemployment remains stable, and Trump continues pressuring the Fed for rate cuts.
Current Federal Funds Rate
Key Insights:
- Rate Cuts Possible: Oxford Economics predicts up to three 0.25% cuts in 2024, possibly starting in March. Fed Governor Waller agrees cuts could come sooner if inflation cools.
- Crypto Stance: Powell stated banks can serve crypto clients and that the Fed is not anti-crypto.
Market Reaction: Broad Market: The Fed's decision to maintain rates was in line with expectations, calming market fears of immediate monetary tightening. However, some investors are still interpreting Powell's comments and presser as hawkish and the probability of rate cuts this year have declined
Crypto Market Impact: Bitcoin surged to $104.5K following the announcement, signalling strong investor confidence in crypto assets as the Fed adopts a more accommodative stance. Broader crypto markets likely benefited from this upward momentum, as risk appetite returned post-FOMC.
Implications:
- A cautious Fed keeps the liquidity outlook open, supporting crypto sentiment.
- Early rate cuts could boost speculative assets, including Bitcoin.
Coinbase cbBTC
You can now borrow against your Bitcoin without selling it, with Coinbase offering instant loans in USDC. Rather than choosing between selling your Bitcoin today or holding it for the future, you can use the loan to cover major expenses such as a mortgage. Borrowing is available for up to $100,000 USDC, depending on the amount of Bitcoin you provide as collateral. This service is only available to US citizens. USDC is deposited instantly, with no repayment schedules or deadlines. However, the loan-to-value (LTV) ratio must remain below 86% to avoid triggering an automatic liquidation to repay the loan. The USDC received is redeemable at a 1:1 ratio for US dollars.
Represents cbBTC growing market cap
What's the catch?
While this Bitcoin-backed loan may seem appealing, there are some important considerations to keep in mind. Firstly, Bitcoin remains a highly volatile asset, meaning sharp price declines could lead to automatic liquidation, requiring borrowers to remain vigilant. Secondly, instead of simply holding your Bitcoin as collateral, Coinbase converts it into cbBTC, a wrapped version of Bitcoin, which is then transferred to a third-party Morpho. This collateral is held under a smart contract on the Base Network. Since Bitcoin and cryptocurrency are built on the principle of decentralisation, some Bitcoin holders may not be comfortable with the third-party risks involved in swapping BTC and moving it into a lending pool.
There are also questions around taxation. While some believe that this loan structure does not create a tax event, this may not be entirely accurate. In most cases, swapping one form of cryptocurrency for another, including wrapping Bitcoin, triggers a taxable event. However Coinbase claims that "borrowing against Bitcoin instead of selling it can help delay a tax gain or loss," the tax treatment of such transactions remains unclear. It is strongly recommended that borrowers consult a tax professional to determine the potential implications before proceeding.
RWA Tokens Gather Momentum
Real World Assets (RWAs) were among the strongest sectors to rebound following Monday’s crypto recovery, with Ondo and Chex surging 65% and 70% from their lows respectively. RWA refers to the process of digitally representing financial assets on a blockchain, enabling fractional ownership, increased liquidity, and more efficient trading and settlement.
Ondo Token Report - Read here
Chex Token Report - Read here
Ondo is hosting a high profile summit in New York this week, with key figures from traditional finance in attendance, including BlackRock and Franklin Templeton. Today, Ondo unveiled Ondo Global Markets (GM), a tokenisation platform designed to enable on-chain access to stocks, bonds, and ETFs. Ondo describes this initiative as doing for securities what stable coins did for dollars, marking a major step toward integrating traditional assets into blockchain based financial systems.
Tokens issued through Ondo GM will each be backed 1:1 by an underlying asset, such as publicly traded stocks, and will be freely transferable outside the US. Users will gain access to thousands of quality securities listed on the US stock market, including individual stocks like Apple and Tesla, with 24/7/365 availability, eliminating traditional market constraints.
Chex announced plans this week to enter the U.S. market and pursue securities licensing, building on its existing hard to obtain regulatory licences from the Monetary Authority of Singapore.The major catalyst for today’s price surge is the partnership between R3 Sustainability and Chex, enabling R3 to launch a sustainable, blockchain based investment fund. This will leverage Chex to facilitate a $795 million RWA tokenisation fund, exceeding Chex’s entire market capitalisation itself. Additionally, each tokenisation event on Chex burns a portion of its native token, reinforcing its deflationary model, which drives long term scarcity and potential value appreciation as adoption grows.
This announcement comes just a day after on-chain RWA assets hit an all-time high of $17 billion. Projections from Citi and McKinsey suggest the tokenised asset market could grow to between $2 trillion and $4 trillion by 2030, underscoring the sector’s increasing significance and long-term potential.
World Liberty Chooses Ethereum
World Liberty, Trump’s project, is steadily accumulating ETH, reportedly investing over $200 million into Ethereum and acquired $wBTC on Ethereum. Eric Trump even tweeted about buying ETH which has been fuelling more speculation, and with an Ethereum staking ETF on the horizon momentum is definitely building.
- Today World Liberty Financial withdrew over $316 million in cryptocurrencies to Coinbase
