Crypto Markets Daily Mar 5 2025

Daily Updates:

• In yesterday’s address to Congress, President Trump argued his plans of tariffs would raise “trillions and trillions” in revenue for the US against trading partners exhibiting unfair trade practices against the nation. He stated that “tariffs are about making America rich again” and “there’ll be a little disturbance, but we’re OK with that. It won’t be much.”
• The speech came after Justin Trudeau’s government announced its own phased program of counter-tariffs against US products in retaliation to the 10-25% tariffs Trump has placed on Canada. Trudeau’s tariff program initially will include a 25% tariff on $20.6B worth of US imports such as orange juice, wine and coffee, later extending to $106B worth of goods in 3 weeks. 
• The Bank of Canada has previously projected that the first year of a trade war with the US could result in a significant 0.5% GDP growth contraction to Canada’s economy. 
• Additionally, yesterday we highlighted that China’s tariffs of up to 15% on American agricultural products also went live. 

• The continued cycle of tariff after counter-tariff has taken its toll on risk appetite across asset classes. The 2 year US treasury yield fell by 11bps before paring back some losses over the day, and the S&P 500 closed yet again a full percentage point lower than its open yesterday. The Index closed at its lowest level since the November 5th election last year, completely wiping out all post-election gains. 
• According to CME’s FedWatch tool, traders are now currently pricing a near 50% chance of a Fed rate cut as early as May, and 3-quarter point reductions before the year ends.

• Following the SPX’s close however, BTC moved up through the day from $82K close to $89K and is currently up 6% on the day so far. That move up coincides with an out of hours move in equities (S&P 500 Futures up 0.88%), likely a result of Commerce Secretary Howard Lutnick suggesting the possibility that Trump may roll back the tariffs against Canada and Mexico and that the tariffs may land “somewhere in the middle”.  

• In derivatives, both BTC’s and ETH’s term structure inversion continues and short-dated optionality remains very much in demand. That demand for optionality is currently expressed strongly for protection against further downside after the past week’s volatility, despite spot’s recovery higher so far today.

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• Ethereum's Pectra upgrade was successfully deployed on the Sepolia testnet today, marking a major milestone toward mainnet activation. However, developers may delay the mainnet launch due to unresolved issues from a previous failure on the Holesky testnet.
• The SEC has officially dropped its unregistered securities trading lawsuit against Cumberland DRW, adding another crypto case dismissed to the list. This comes after a joint filing was signed by the SEC and Cumberland DRW, dismissing its case in principle, on February 20
• The Senate voted 70-27 to overturn the IRS' DeFi broker rule, which aimed to include DeFi and crypto trading organisations under existing securities brokerage regulations. This marks the first step in reversing the rule introduced by the Biden administration. The next step is a supporting vote by the House of Representatives, after which President Donald Trump can sign the reversal into law.

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This Week’s Calendar:

Charts of the Day: