Crypto Markets Daily Mar 4 2025

Daily Updates:

• President Trump yesterday confirmed that both Mexico and Canada were unable to negotiate an extension of the one-month tariff pause put in place on the 3rd of February and effective today, a 25% tariff on all imports from both countries are in effect (excluding Canadian energy, which is subject to a lower 10% rate). 
• Speaking to reporters, Trump stated there is “no room left for Mexico or for Canada”. 
• Additionally, the President announced that he would double the levies imposed on China from 10% to 20%, signing another executive order to confirm his actions. China was quick to retaliate – and has in turn imposed additional tariffs of up to 15% on various U.S. agricultural goods from the 10th of March and also announced its plans to restrict exports to 15 different U.S. companies.
• Trump’s tariffs didn’t just end here either – he also stated that the US would impose tariffs on “external” agricultural products from the 2nd of April. 

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• Separately, yesterday’s ISM Manufacturing data showed the Manufacturing PMI, considered as one leading indicator for the health of the US economy, receded to 50.3 in February from a 50.9 value in January and below expectations. Values below 50 indicate a contraction in the manufacturing sector. Alongside this, the survey also found that the Prices Index surged by 7.5 points to 62.4 from January’s 54.9 reading. 
• The Atlanta Fed’s GDPNow forecast, which we covered in yesterday’s comment, is now predicting an even larger drop in productivity – real GDP is currently expected to decline by 2.8% in Q1, from a 1.8% decline predicted on Friday.

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• Whilst the S&P 500 opened higher Monday morning, the tariff and growth news resulted in a large sell-off across risk-on equities – SPX closed 1.76% lower and the NDX ended the day 2.2% lower than Monday’s open. That risk-off sentiment slash was even bigger in crypto markets, as total crypto market-cap fell by over $500B. 
• BTC has erased most of its gains following the Strategic Reserve announcement over the weekend. It is currently down 9% on the day at $83K. ETH has completely reversed the gains it made following Trump’s Sunday announcement, currently 5% lower than where it was trading ahead of the Strategic Reserve news.
• Implied volatility levels for BTC and ETH at the front-end of the term structure have jumped up considerably with longer-tenor vol in comparison inching up only slightly. This has led to an even steeper term structure inversion following yesterday’s spot rally driven inversion. For BTC, 7-day tenor implied volatility is at its highest since the start of February. 

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• In Germany, Chancellor Merz’ CDU party and their likely coalition party, the SPD, are reportedly planning to introduce a €400B ($417B) special defense fund and a separate infrastructure worth as much as €500B euros, which together would amount to 20% of Germany’s GDP. The boost in fiscal spending has the potential to at least partially revive Germany’s economy which saw a 0.2% contraction in GDP in Q4 2024. 
• Crypto exchange Kraken released a statement on Monday confirming that the SEC has agreed in principle to drop its 2023 lawsuit which accused the company of being an unregistered securities exchange. This comes after the SEC agreed to drop a similar case against Coinbase exchange. 

This Week’s Calendar:

Charts of the Day: