Markets in Flux: Trade Tensions Trigger Crypto Selloff and Broader Risk Repricing

Market Summary

Escalating trade tensions between the U.S. and its major trading partners weighed on equity market performance this week. Crypto markets mirrored this broader uncertainty, with Bitcoin and Ethereum suffering significant declines amid record ETF outflows, and shifting macro sentiment. The week’s volatility underscored the increasing integration of digital assets/securities into the broader financial markets, with investors responding to the same liquidity and risk dynamics that shape traditional markets.

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Key Market Drivers & Implications

1. Crypto Selloff Deepens Amid ETF Outflows & Market Turmoil

• Earlier this week, Bitcoin fell 5%, breaching the $77K level before rebounding to $83K level, while Ethereum dropped 11%, marking its lowest price since October 2023. The broader altcoin market fared even worse, with Dogecoin (-14%), XRP (-10.7%), and Cardano (-10.2%) all suffering steep losses.
• According to CoinShares, global crypto funds saw $876M in net outflows last week, bringing the four-week total to $4.75B. Bitcoin spot ETFs recorded $1.01B in daily outflows on Tuesday alone, with major issuers like Fidelity and BlackRock leading the withdrawals.
• Bitcoin futures spreads have collapsed, with the front-month CME Bitcoin futures spread narrowing to just $495—a stark contrast to the $1,705 peak in December. This signals diminishing speculative appetite and suggests the market is recalibrating expectations around crypto’s role in a tightening liquidity environment.

2. U.S. Labor Market shows signs of slow down while Inflation figures decline slightly

Last week’s  U.S. Non-Farm Payrolls (NFP) data revealed weaker-than-expected job growth, with only 151K new jobs added versus the 160K forecast. While this may seem like a marginal miss, it adds to the growing evidence that the labor market is no longer as strong as before. February US unemployment ticked up 4.1%, while U.S. jobless claims filings fell by 2,000 to 220,000 and The four-week average, which evens out some of the week-to-week swings, was up by 1,500 to 226,000.

• US Feb CPI: Actual  319.082/ Forecast 319.22
• USD Feb Non-Farm Payroll: Actual 151K/ Forecast 160K
• Weekly Jobless Claim ending on March 8th: Actual 220K / Forecast: 225K

3. U.S. wages Trade War with multiple tariffs igniting further concerns and uncertainties in 2025

Equity markets:

• The disorderly implementation of U.S. trade policy has rattled markets this month, clearly raising uncertainties in corporate and consumer confidence. US Equity markets continue its decline this week. S&P 500 (-6.19% YTD), Dow (-4.09%), and Nasdaq (-10.44% YTD)  as of March13th.  
• As of the 13th of March., The losses have intensified this week. From ATH on Feb 19th, S&P 500 has declined by 10.1%.  
• As of March 13th, DAX Index is down by 1.92% vs Friday Close, up by 13.35% YTD. FTSE 100 is down by 1.58% vs Friday Close, up by 3.87% YTD.

New Tariffs by Trump Administration

• 25% tariff increases on imports from Canada and Mexico were implemented on 4 March 2025
• President Trump exempted imports from Canada and Mexico that satisfy the certain ‘rules of origin’ requirements (which means that those goods receive the label “made in Canada” or “made in Mexico”). These rules come from the United States–Mexico–Canada agreement (USMCA), a free trade agreement negotiated during the first Trump administration, on 6 March 2025
• 25% tariff on all aluminium and steel imports from 12 March 2025 to protect domestic industries and jobs.
• Canada imposing 25% tariffs on $155 billion worth of imported goods from the US, beginning immediately with a list that includes orange juice, peanut butter, wine, spirits and beer
• China filed a dispute in the WTO and announced retaliation targeting, among others, US farm imports and implementing export controls on 15 companies.
• The EU announced it will impose countermeasures on £22 billion worth of imported goods from the US, including industrial products, household tools, plastic and wooden goods.

4. Bitcoin vs. Gold: A Correlation Shift?

• Spot Gold price hit $3000/oz intraday high, all time high level on March 14th. Gold Lending Rate by banks are circa 9%/annum now due to high demand on Spot gold outside of high demand seasons in India and China.  
• BTC/Gold Ratio has fallen 30% from its all-time high. Historically, similar declines have preceded local bottoms in Bitcoin, with a further 6% drop potentially marking an accumulation zone.
• The percentage of Bitcoin supply in profit has dropped from 99% to 76%, indicating that nearly a quarter of BTC holders are now at an unrealized loss. In past cycles, this metric bottomed out around 70% before a recovery, suggesting that Bitcoin may be entering a period of prolonged consolidation before a potential reversal.

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Outlook: Navigating Uncertainty

Markets remain in flux, with investors grappling with uncertainties by trade war, inflation, labor market weakness, and crypto-specific structural shifts. Key focus areas for the coming week include:

• Impact of Tariffs to Inflation in coming weeks: Although CPI figures have pointed out declining trends on inflations, market participants expect Jun Rate cuts, based on CME FedWatch.
• Crypto ETF Flows: No clear indication of additional capital allocation by the US Government to Bitcoin Strategic Reserve beyond current holding by the US Gov.  While Bitcoin market is still highly correlated to US Equity market, a temporary reversal of diversification to cryptocurrency is expected.
• Asset Rotation-Portfolio Adjustment: US, EU, Japan Gov debt yields are stable and edging higher while US equity markets may face further risk off into deeper correction territory. Potentially a persistent inflation from trade war will be a strong headwind for corporate earnings and dividends while cheaper funding sources are hard to come by. A shift in portfolio allocations is expected, flight to quality and safety for now, i.e. stable income above risky bet.

For now, the overarching theme remains risk-off positioning, but pockets of opportunity may emerge for those willing to take a contrarian view.