The Fog of Trade War (Core Strategy Rebalance)

Feb 4, 2025 • 6 Min Read

Core Strategy

With the looming threat of an escalating trade war and economic data robust enough to discourage a more dovish Fed stance, we believe the upside risk for the DXY and yields has increased in Q1. Moreover, the market remains highly volatile and headline-driven, inhibiting the crypto market from gaining meaningful momentum. While regulatory developments are a key medium- to a long-term tailwind for crypto, it is unlikely that any incremental “good news” will be announced in the near term.

To be clear, we still anticipate that crypto will outperform this year. However, we believe it is prudent to manage downside risk in the near term (1-2 months) and consider raising cash/reducing altcoin exposure (plan for BTC dominance higher). We will discuss some of the things we will be looking for to turn more constructive in our note below.

The chart in this report is only accessible to members
The chart in this report is only accessible to members

Tariffed

On Friday afternoon, we received word that the Trump administration was considering imposing tariffs on Mexico and Canada, with details to follow the next day. On Saturday, those details were released: a 25% tariff on Canada and Mexico, along with a 10% tariff on China. An exemption was made for Canadian energy imports, which would be taxed at 10%. In response, Canada imposed...

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