PANews reported on January 15 that QCP Capital, a crypto investment institution in Singapore, published an article today saying that it is less than a week away from the inauguration of the 47th US President Trump. Similar to 2017, Trump has found ways to shake up global markets even before he officially took office on January 20. Inflation concerns continue to plague the US market. The US job market remains strong, with last week's non-farm payrolls (NFP) unexpectedly increasing (+256,000, expected +165,000). Although the consumer price index (CPI) seems to be easing above the 2% target and the producer price index (PPI) has also cooled, market participants still expect the CPI in December to be higher than the previous value. Trump has made a lot of noise about his plan to impose tariffs on trading partners, which has further exacerbated inflation concerns. Unlike the initial expectation of a comprehensive tariff increase, it now appears that the new government will gradually impose tariffs on some imported goods. Troubled by the shadow of inflation, bond yields have begun to climb again. The market is currently pricing in only two rate cuts in 2025 and 2026 (while the Fed’s latest dot plot had predicted four rate cuts), and 10-year and 30-year Treasury yields are approaching 5%. As Treasury yields rise, the stock market has also experienced panic, with the S&P 500 falling below the 5,800 support level. Bitcoin followed suit, briefly falling below the $90,000 mark.
Given recent developments, the current macroeconomic environment does not appear to be favorable for risk assets. However, one positive factor is that Trump's actual policies often differ greatly from his public statements. Inflation concerns may not be as severe as the market expects. For cryptocurrencies, there are crypto-friendly personnel in the Trump administration. There are rumors that Trump will issue broad and crypto-friendly executive orders, which provides short-term positive support for cryptocurrency prices. Market volatility is expected to increase before and after Trump's inauguration as the market needs to digest and adjust to Trump's new term. We remain cautious about the $90,000 price level for Bitcoin as it has been tested many times. The stock market also appears fragile, coupled with the rise in global bond yields, which may lead to market dislocation and increased volatility.
