"The Most Beautiful Word"
Weekly Market Review: The Most Beautiful Word
Feb 10, 2025 | Josh Olszewicz, PM & Trading
Key Takeaways
- Markets continue to hold a reactionary stance towards tariff headlines
- BTC has pulled back in the face of uncertainty, with altcoins down further
- State reserves and pensions could drive positive BTC price action in Q2
Digital Asset Commentary
Tariff headlines and rhetoric continue to dominate market expectations, with Trump considering new tariffs on China, Japan, the EU, and the UK this week. This tariff uncertainty and impact likely contributed to a rise in the UMich inflation expectations survey from 3.3% in January to 4.3% in February. The survey also shows a strong political bias, with Dems at 5.1%, Independents at 3.7%, and Repubs at 0%. Markets have leaned toward trading on the headline numbers for these economic data point releases and seem to be unconcerned with looking under the hood.
Fear and uncertainty around trade policies have made investors more cautious, especially in risk markets like digital assets. Altcoins, which typically perform best in rate easing and rising liquidity environments, have underperformed relative to BTC significantly in recent weeks. With the Reverse Repo nearly fully drained of its $2.5T and an upcoming Treasury General Account drawdown of $800B, liquidity may increase in the coming months.
While a federal BTC strategic reserve appears unlikely in the near term, 20 state legislatures have now proposed BTC purchases. If these bills pass, it could trigger the seasonally strong price action typically seen in Q2, which has posted a median return of +7.38% since 2013. Pension funds in Wisconsin and Michigan have already disclosed significant holdings in BTC ETFs. As of 2024, global pensions and endowments are estimated to total nearly $60 trillion.
