This week, Bitcoin struggled to maintain its position above $100,000, facing heightened volatility due to macroeconomic uncertainty and geopolitical developments. While the broader market remained cautious, Ethereum showed resilience, and regulatory shifts added complexity to the crypto landscape.
Macroeconomic Overview
The week began with President Trump implementing tariffs on Canadian, Mexican, and Chinese goods, triggering a significant risk-off move in global markets. The Nasdaq Composite dropped 3.1%, while gold, oil, and crypto assets experienced increased volatility. Treasury yields bear-flattened, with short-term yields rising while long-term yields fell, signaling inflation concerns alongside broader trade war risks.
Bitcoin initially sold off, dropping below $98,000 before briefly reclaiming $100,000. However, a delayed tariff implementation for Mexico and Canada provided temporary relief before China retaliated with its own trade measures, reigniting uncertainty. Reports of a potential U.S. sovereign wealth fund also contributed to speculative interest, but details remained unclear, keeping markets on edge.
Amidst this uncertainty, the Fed held rates steady, as expected, with market participants shifting focus to upcoming economic data and potential future policy adjustments.
Crypto Market Dynamics
Bitcoin’s attempt to reclaim $100,000 was met with resistance, leading to a three-day losing streak that saw BTC touch new local lows of $95,600. While broader macro pressures contributed to the selloff, liquidity rotation within the crypto market also played a role.
Ethereum outperformed Bitcoin during the week, as capital rotated into ETH following continued optimism around potential ETF approvals and improved market structure. The ETH/BTC ratio climbed to 0.032, signaling a shift in investor sentiment favoring Ethereum’s growth narrative.
Meanwhile, Trump’s crypto deregulation push gained traction as reports surfaced that the SEC was downsizing its crypto enforcement unit. The FDIC also signaled potential adjustments to allow U.S. banks to engage in crypto-related activities without prior approval, fueling optimism around regulatory clarity.
In the altcoin space, Binance’s listing of $BERA saw the token surge to $15.50 before stabilizing at $7.60. The rally temporarily siphoned liquidity from other altcoins, contributing to broader crypto weakness.
Flows and Market Activity
Paradigm flows highlighted a mixed sentiment across crypto derivatives, with notable activity in both upside call spreads and downside puts.
· Large put buying across the 28-Feb-25 80k and 21-Feb-25 90k strikes, reflecting cautious sentiment.
· Heavy call selling at 28-Mar-25 130k and 175k strikes, indicating traders taking profit or hedging against further upside.
· Call spreads at 27-Jun-25 130k/180k were bought, suggesting long-term optimism despite near-term uncertainty.
· Bull risk reversals lifted at 28-Feb-25 2600/2700, indicating a constructive bias on ETH.
· Significant put spread buying across February expiries, reinforcing near-term caution.
· Strong call activity in March and June expiries at 3200/3700 levels, suggesting positioning for a potential ETH rally.
BTC front-end implied volatility remained elevated, though implieds softened toward the end of the week. BTC basis hovered around 10% annualized, reflecting mixed expectations for near-term price movement.
Outlook
Bitcoin’s ability to hold above $95,000 will be a key indicator of market resilience in the coming weeks. The upcoming non-farm payroll report is expected to provide further macroeconomic insights, with potential implications for Fed policy and risk asset performance.
Regulatory developments, including the SEC’s potential restructuring and FDIC’s evolving stance on crypto banking, could shape sentiment in the coming months. While Bitcoin faces headwinds, Ethereum’s relative strength and structural improvements in the derivatives market suggest it may continue to outperform.
In summary, Bitcoin’s failure to hold $100,000 has led to a near-term reset in sentiment, while Ethereum has shown stronger relative performance. With geopolitical risks, macroeconomic uncertainty, and evolving regulatory developments in focus, crypto markets are likely to remain volatile in the short term. The coming weeks will be crucial in determining whether BTC can reclaim six figures or if further downside risk remains.
About Author
Chris Newhouse, aka @CryptoDeFiGuy, is a tutor of @coincall_global and a seasoned crypto trader turned director at Cumberland.
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