Key Takeaways
- Fundamental data has failed to instil any confidence as headlines continue to grapple investors.
- Improving global inflation and liquidity conditions have landed on deaf ears, with the market taking little interest.
- Chart of the week – US Economic policy uncertainty at Covid levels
With the saturation of Trump in our day to day lives, it’s easy to understand why Tariffs is one of (if not the biggest) key driving factor of the crypto markets in 2025.
The market has become reflexive to headline risks, trying to make sense in an environment where clarity and consistency appear to be out the window from the Trump administration. And unfortunately, they’re calling the shots.
The thing is, it isn’t just the market that’s drowning in the unknown. Policymakers themselves are unable to decipher what the immediate and long-term future holds. In an address to the Economic Club of Chicago, US Federal Reserve Chair Jerome Powell made these comments overnight:
“Rising tariffs under the new Administration threaten to disrupt the Fed’s inflation control efforts, potentially creating tension between its employment and price stability mandates.”
“Despite a solid labour market, the Fed warns of economic slowdown and heightened uncertainty due to evolving trade, immigration, and fiscal policies.”
“The Federal Reserve signals a cautious approach to monetary policy adjustments as it navigates tariff-driven inflation risks and a slowing U.S. economy.”
So when we pool it all together – it’s as clear as mud from all angles. There is demand from investors and policy-makers alike on clarity and consistency.
There is no solid forecast on what should or could happens next. We are living in unpredictable times.
Today I want to go over some data points and explain how the backdrop has been evolving and get away from the noise. Once the policy and tariff details become clear, having an appreciation of general conditions could prove valuable.
Cooling inflation readings
The global trends for inflation have been cooling. Prior to the tariff noise, inflation trends have been a driving market force since 2022, hitting multi-decade highs globally.
Since 2023, inflation has been trending lower and this continues to be the case. Last week we saw lower than forecast readings for inflation across China and the US.
Source: Trading Economics – US, Europe and China core inflation readings over the last five years.
Money in the system is expanding
More money in the economy has historically correlated with periods where Bitcoin, and subsequently altcoins, have performed well. I recommend checking out this article on Swyftx Learn for a deep dive on this, and explore some of the potential catalysts ahead in 2025.
Since 2025 kicked off, central bank balance sheets and global M2 data show increased money in global circulation.
However, my take on why this hasn’t impacted positivity in crypto markets is due to these uncertainties on headline risks and policy direction.
Chart of the week – Economic policy uncertainty at Covid levels in the US
Metrics, like the one below, use modelling to quantify the uncertainty that we are feeling in the market through a survey. Interestingly the lack of direction and clarity has sized up very similar to measurements made during the Covid pandemic.
These are uncertain times, and ultimately, clarity and confidence could take time to repair. Unless we receive an unexpected dose of positive news from the Trump camp regarding tariffs in this global trade war, I’m expecting more volatility in the near future.
Personally, I am waiting for deals to start rolling in. We’ve seen negative sentiment price in as tariffs have been applied, but we are yet to see what will happen when deals are made between the US and affected countries. Deal headlines could potentially be the next big positive catalyst ahead.
But for now, we just have to sit tight.
💱 Swyftx Flows
The buy-to-sell ratio for unique Swyftx orders is nominally >$20,000 AUD (rolling data over the last 7 days, captured at 09:00 am AEST).
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