Trump pivots, crypto pops — is this the calm or the trap?

In this report:

• Trump Pivot?
• High Level of Uncertainty Remains, Although Peak Volatility Is Probably Behind Us.
• Crypto Setup.
• Cryptonary's Take - How We're Playing It.

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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Trump pivot

Yesterday, President Trump substantially cooled his rhetoric around tariffs, saying that he'll be looking to do a deal with China and that the 145% tariff rate would come down, and that he was looking to be "very nice" to China. This likely results in the tariffs coming down to just 10%, potentially.

This for sure is a U-turn in the narrative from Trump, who was seemingly not making much progress in getting China to the negotiating table. The Chinese have essentially called Trump's bluff, as the US needs a resolution due to the markets having pulled back significantly off the back of all this uncertainty.

Whilst China exports just 12% of its goods to the US, they've almost been in a position where they're the least desperate of the two, hence Trump (the US) is the one that's seemingly caved. This seems to have been pushed by Treasury Secretary Scott Bessent, who looks to have taken a more proactive role recently, with tariff hawk Navarro taking more of a back seat.

This has been since we've seen further weakening in the Bond market, which has aligned with the Trump Put coming in when the Bond market has shown signs of breaking.

However, one note we'll make: just because Trump has come out and said he'll be "very kind" to China, doesn't mean he's going to go from a 145% tariff rate down to 0%.

The likelihood is that it finishes at 10%, but what stops Trump in the meantime from coming out and saying he's revised the 145% down to 50%, and still saying that he's been "very kind" to do that? Of course, markets would then react negatively to that, as a 50% tariff rate is still not good.

One thing we do know, with Trump, it's very hard to call.

What’s next?

With Trump’s tariff U-turn raising more questions than answers and inflation likely to tick higher, how long can this market rally hold—and what shock could trigger the next leg down?

High level of uncertainty remains, although peak volatility is probably behind us

Recently, we have seen the economic data begin to weaken, particularly in the 'soft' data, which we have also started to see show up in the harder data. But, as we covered in our last Market Update report, inflation is likely to come in hotter again over the coming months, due to the tariffs and the uncertainty around them.

This likely leaves the FED on pause until at least July, and the FED will likely have to wait until there is material weakening, and they'll be looking to that in the jobs market, which so far, is holding up ok.

However, the uncertainty around the Trump administration's policies will mean that investment is still stalled, and companies are unlikely to engage in expansion plans. This likely results in a continuation of the slowdown, which will eventually lead to the FED cutting interest rates. The chances are, it's just further out - July at the earliest we'd say.

So, despite the aggressive bounce we've seen in Crypto, we're still expecting markets generally to remain range-bound over the coming 1-2 months.

We do think peak volatility is behind us, as we mentioned a few weeks ago (peak tariff hawkishness), but we expect the policy uncertainty to keep markets range-bound rather than accelerating to new highs. It's likely we saw peak volatility when the VIX spiked to 60 in early April.

VIX Spike:

Crypto Setup

Yesterday, we saw strong ETF inflows into BTC, the biggest since mid-January. This is, of course, positive to see, but alongside this, we did see a huge spike in Open interest as well.

BTC ETF flows:

For Bitcoin, we've seen a large breakout to the upside with price now entering the old range between $91,700 and $98,900, although price is still below the mid-point of $95,700. We have drawn arrows as to what we think the potential path for price could be.

This is due to the macro uncertainty we still have ahead of us, and the fact that rate cuts are likely not going to come in the coming 1-2 months. In 2024, we saw the same situation, where the market was looking for interest rate cuts, and they kept getting pushed out.

During that, we saw a price chop between $50k and $72k. There's good reason to expect something similar here for the next 1-2 months, say between $95k and $74k. Yes, we think the current price might be a local top, and therefore, we're not looking to buy BTC today.

BTC:

However, in the short term, even if we think BTC can stall out here, it's possible Alts/Meme's see some further rebound. If we look at the TOTAL3 on the 3D timeframe, we can see that the horizontal level of $700b was held, and the price has now broken out to the upside of the downtrend line.

We do still expect a lower high to be put in, and we see price stalling in the red box between $865b and $930b before a continuation lower and another retest of $700b.

TOTAL3 3D timeframe:

Cryptonary's take

In short, we're not buying the Majors here, and even if some of the Alts/Meme's can continue their relief rallies, we're still of the view that this is a relief rally. BTC is at such a key level here, and if it can reclaim back above $98,900 (say $100k), we'd have to reconsider.

And yes, we did think that target point was lower (at where we're priced now), but when we zoom out, we still find it hard to be super bullish here, particularly in buying some of these assets that have now run like they have. We think Alts/Meme's might have more room to go higher, but Majors (BTC, ETH, SOL and HYPE) look to be at local tops here.

The big question now, then is, if we're not buying now, when are we?

For those that are more passive, you can DCA down once certain price levels are retested; however, if you want to be more active, we would wait for substantially lower prices again.

For BTC: we're expecting a retest of $86k as a minimum. If you're more passive than and feel fomo missing out on rallies, then consider adding them. Personally, and this is me (Tom) personally speaking, I'll be looking to add below $82k. However, it is a moving target, and we're going to have to keep assessing and being willing to change the goalposts here, unfortunately.

For ETH: we still expect $1,230 to $1,530 to be tested, so we're waiting for those levels, simple as that.

For SOL: we're looking at $110 to $130 as a potential zone. Although we're open to the idea of $100 being revisited again, but this could take 1-2 months.

For HYPE: $13.00 as the first target, and we're open to the idea of $10.00 being revisited also.

This is a phenomenally hard market to work out, and we have underestimated the strength of this rally, but we still do believe this is a relief rally, as we're expecting a continuation of the economic uncertainty, and a FED that are stuck on pause for more months as inflation increases due to tariffs - and that is in our near future.

But, beyond this, we're expecting a tonne of positivity with a FED that's cutting rates from at latest September onwards, and that's when we believe we'll see the animal spirits return, which can provide those 10-100x runners (opportunities) again. But for now, we're patient, and we're not chasing this move; however, we have upped our buy zones very slightly - that's the only change.

Lastly, we are a group of individuals doing our best to work this out and report to you guys. Our track record is very good, but we cannot always be right, so take this into consideration. Thank you ✌️