Macro update

Last week's rally looked relatively promising until geopolitical tension threw a wrench in the works. BTC convincingly broke the $95k ceiling which had been capping prices since November as it ran to close to $98k levels midweek. Prices benefited from the amalgamation of three drivers as we had (i) ETF flows returning in size ($760M single-day inflow Tuesday, $1.4B for the week), (ii) supportive inflation data (Core CPI at 2.6% YoY, slowest since March 2021), and a (iii) catch-up trade to gold after BTC had lagged hard assets for weeks.

While positive momentum slowed down somewhat over the weekend, downward pressure was only re-introduced on Monday (today) as Trump announced 10% tariffs on eight European countries over Greenland, escalating to 25% by June. The EU immediately prepared €93B in retaliation. All while Iran tension continued to grow.

As a result, before Monday, crypto, and more specifically the majors were top performers, however, due to the macro jitter, that strength was quickly sold off as risky assets saw negative pressure and crypto's recent break from a 50-day tight range left it relatively fragile. As a result, on Monday, BTC fell back to $92k levels and we saw $850m of long liquidation within hours (of which half across BTC/ETH), showing that there was some returning appetite for leverage, something we hadn't seen in a while.

Beyond price action, we're not short of interesting headlines that are bound to shape up the medium-term outlook either. The CLARITY Act hit a snag as Coinbase and the White House clashed over stablecoin yield provisions, if delayed or watered down, it removed a near-term catalyst for institutional regulatory clarity. In other news, Goldman confirmed active exploration of tokenisation and stablecoin technology, while South Korea passed amendments establishing a legal basis for tokenised securities. And finally the NYSE confirmed exploration of 24/7 trading through tokenization.

Looking ahead, Tuesday's US cash open post-MLK will be the first test of whether Monday's flush finds a floor. It's also Davos week, with Trump attending the World Economic Forum for the first time in six years, expect headline risk around trade policy, tariffs, and US foreign policy positioning. Thursday brings an EU emergency summit responding to Greenland tariffs, the market will be watching for escalation or de-escalation signals. Friday's Core PCE print is the week's main macro event as the Fed's preferred inflation gauge sets the tone heading into February's FOMC. In the background, a pending Supreme Court ruling on Trump's tariff authority could create significant volatility if ruled against the administration, with implications for trade policy, refund liabilities, and deficit expectations.

Our take:

“It seems like we’re heading up after breaking the narrow trading range of the past 50 days"

The pattern shifted last week. For the first time since November, BTC broke range on real flows rather than leverage. ETF demand is back, the inflation backdrop is supportive, and crypto started catching up to the broader risk rally.

The Monday flush was violent but healthy, leverage cleared quickly, and the market didn't spiral. That's constructive. The question now is whether the tariff noise remains theatre or becomes policy. Markets are betting on the former: equities and USD are still higher YTD, rates haven't repriced.

Near-term, watch Tuesday's open and Friday's PCE. If BTC holds the low-$90s through the week and ETF flows stay positive, the breakout thesis is intact. If we lose $90k on follow-through selling, the November range becomes resistance again. For now, the bid looks real.