Crypto Markets Fluctuate Amid Tariff War, Possible ETH Comeback, and How to Respond to Increase in Fear Index

Listen to the Weekly Wrap on Spotify. It is a summary with the help of AI-voices. 

This Week’s Top Stories

“Tariff War Between the U.S. and China – Deal or No Deal?” – This week 

• It has now been more than two weeks since the infamous U.S. Liberation Day, when President Trump announced his new tariffs and shook up the world economy, as most market participants did not expect tariffs on such a large scale. A lot has happened meanwhile: last Wednesday, President Trump announced a 90-day suspension of new tariffs for dozens of U.S. trading partners, while simultaneously escalating tariffs on Chinese imports, which were raised to 145 percent. This news triggered an extraordinary market rally: the S&P 500 rose 9.5 percent in a single day, while the Nasdaq gained 12 percent. The S&P experienced its largest single-day gain since 2008. 
• Now this week, the story is all about the U.S. and China, or President Trump and President Xi and their plans regarding negotiations or escalations of the current tariff war situation between the countries. Last Thursday, President Trump remarked that he is very eager to reach a trade agreement with China to end the escalation. 
• On Friday, China’s Tariff Commission announced a raise on certain U.S. imports from 84 to 125 percent, effective April 12, 2025. This move then forced the U.S.’s hand to increase its tariffs on Chinese goods again. China currently faces up to 245 percent tariffs on imports to the U.S. as a result of this trade war. 
• The 10 percent baseline tariff that went into effect on April 5 remains in place for all affected imports into the U.S. While the focus is now mainly on this situation between the U.S. and China, there is also uncertainty about what will happen with all the other U.S. trade partners after the 90-day suspension. 
• On Wednesday, April 15, U.S. White House officials communicated that the ball is currently in China’s court and that the U.S. does not have to make a deal with them. 
• It increasingly seems that President Trump and his team are trying to use tariff negotiations with more than 70 nations to ask them to disallow China from shipping goods through their countries, as they seem to be trying to use the tariffs to isolate China.

“Economic Impact of Tariffs likely Larger than Expected but Markets are Functioning Properly.” – Wednesday, 17 April 2025 

• Fed Chair Jerome Powell spoke at the Economic Club of Chicago on Wednesday and mentioned that the level of the announced tariff increases is significantly larger than anticipated, and that the higher-than-expected tariffs could result in slowing economic growth in the U.S., as well as a rise in inflation. 
• Powell also said that, for the time being, the Fed is well positioned to wait for greater clarity before considering any adjustments to its policy stance, and that they continue to approach policy by analyzing incoming data. 
• Powell’s speech came just days after Scott Bessent said on Monday that the White House will start interviewing candidates this fall to succeed Powell, whose term ends in May 2026.

A Quick Crypto Overview: Sideways Price Action For Crypto 

For the most part, this week was accompanied by sideways price action in the broader crypto market. Bitcoin continues to trade around the $84’000 mark, Ethereum hovers around $1’600, and major altcoins such as Solana and Ripple are also trading within a range. 

The total market capitalization of all cryptocurrencies has corrected almost 40 percent to the downside since its December high and is now up almost 15 percent from its April 7 bottom, which was formed in the aftermath of the Trump tariff announcement at the beginning of the month.

Bitcoin dominance has increased by almost 4 percent since the beginning of the month, indicating growing interest in BTC as it attempts to find its place between being a “risk-on asset” that follows U.S. indices and serving as the digital alternative to gold. 

Gold is up more than 10 percent since April 7, trading at new all-time highs nearly every other day, currently sitting above $3’300 per ounce, as investors around the world appear to be fleeing into safe havens such as gold.

The U.S. Dollar Index, on the other hand, is down more than 10 percent since January reaching new multi-year lows, as the Trump administration has set its goal to lower trade deficits with other countries, and investors seem to be exiting U.S. dollar-denominated assets to return home or move into alternative investments such as gold or Bitcoin.

While there are many significant developments happening in the global macro world, we also want to highlight one notable event in the crypto space this week. On Sunday, OM, the token of the Mantra Blockchain, lost 95 percent of its value in a matter of two hours. That’s right – it lost 95 percent of its value in two hours. While the exact cause is still unclear, various statements are circulating in the crypto space: Coffeezilla interviewed the CEO of Mantra, there was an official statement from the Mantra team, and one X user published an analysis of the price action during the event. 

It appears that someone was aggressively selling OM during low-liquidity hours on Binance Perps, which may have led to an OM whale on the OKX exchange being forced to sell their holdings. However, it could also have been a participant in the attack or an OTC trading firm looking to cash out quickly after noticing the aggressive selling on Binance Perps. 

Another crazy story and a reminder to stay vigilant and do your own research.

Chart of the Week: Ethereum Comeback Arc in 2025? 

Ethereum’s ETH token has lost more than 60 percent of its December 2024 value in a matter of months and its current all-time high was reached on 8 November 2021 – more than three years ago. When compared to bitcoin, Ether has lost even more of its value over the past three years, being down almost 80 percent compared to BTC. What could be going on here? 

A lot of the action of the promising long-term narratives in crypto, such as the tokenization of real-world assets, specifically stablecoins, the institutional adoption, total value locked on different blockchains, decentralized lending etc. is still happening mainly on Ethereum. When looking at the total value locked in DeFi on all chains for example, Ethereum makes up for more than 52 percent of all TVL. Also, when looking at Lending TVL, Ethereum is leading by a landslide, mainly due to Aave with $15 billion in TVL on Ethereum. When looking at the total market capitalization of stablecoins on Ethereum and comparing it to other chains such as Solana for example, we notice that the total Ethereum stablecoins market cap is $120 billion, compared to $12 billion on Solana. 

And yet Ethereum is at multi year lows, compared to the U.S.-Dollar, BTC and even SOL – Ether has lost more than 90 percent of its value compared to Solana since the bear market bottom at the end of 2022, when Vitalik posted a positive tweet about the Solana community, marking its bottom versus the U.S.-Dollar. 

What could it possibly take to turn this around and for Ethereum to get back into the leading seat in the world of altcoins? As we all know, it often does not take much for such a trend to shift. Ethereum needs to find its clear narrative for Ethereum and Ether as an asset to go full steam into the right direction – together as a community. 

When it comes to price action, ETH has raided its October 2023 low, where the impulse to $4’000 at the beginning of 2024 originated from and considering the fundamentals and on-chain data Ether sits in an interesting spot right now, at the very least for a mean reversion trade.

What’s Happening On-Chain? TRUMP Unlocks, DeFi Revenue & More 

Tomorrow, April 18, President Trump’s memecoin is set to unlock 40 million tokens, about 20 percent of the total supply. While the price of the token has decreased by more than 80 percent since its launch, the 20 percent token unlock still leaves the project team with unlocked tokens worth approximately $300 million – not bad. Let’s see whether Trump once again posts about the token in anticipation of the unlock, as he did last time. 

In other news, World Liberty Financial has denied the claims that it sold Ether last week. There were rumors circulating that the Trump family project had sold some of its ETH holdings when the price dropped below $1’500, but the team stated that no assets have been sold. 

When looking at the protocols and dApps with the highest revenue over the past 30 days, we find Tether and Circle in the number one and two spots – Tether with $550 million in revenue, and Circle with $188 million. The two stablecoin issuers are followed by Hyperliquid with $40 million and Pump.Fun with $39 million in revenue over the same period.  

Digital Asset Fund Flows: $800 Million in Outflows Last Week & New SOL spot ETFs in Canada 

Digital asset investment products experienced their third consecutive week of net outflows last week, with almost $800 million flowing out of the products. This brings the total outflows since early February to a staggering $7.2 billion. 

Bitcoin is currently sitting on $545 million in year-to-date net inflows, followed by Ethereum with $240 million and XRP with $180 million in year-to-date net inflows. Solana saw $80 million of net inflows so far this year, followed by Cardano with $70 million. 

When looking at geographic locations, the USA has brought in $740 million in net inflows so far this year, while Switzerland has seen $375 million in net outflows year-to-date. 

This week started on a more positive note for the Bitcoin spot ETFs, with two days of net inflows, but yesterday the BTC products saw net outflows of $170 million – bringing the weekly flows below zero so far.

Yesterday, four Solana spot ETFs started trading in Canada beating the USA in launching the new Solana products, interestingly, the new spot ETFs in Canda include staking services. It will now be interesting to observe how large the interest in the new products will be, as the U.S. Solana spot ETFs will likely be approved at some point this year. 

Market Sentiment: Buy When There Is Fear in the Markets? 

When looking at sentiment in the U.S. stock market, global markets, and the crypto markets over the past few weeks, the question remains whether one should follow the legendary advice of Warren Buffett – buying when there is blood in the streets and most market participants are fearful – or simply sit out until the uncertainty is somewhat resolved. 

As we have indicated in the last weekly wrap at the end of March, the potential for a negative shock from the Trump tariffs did in fact materialize, and prices – along with market sentiment – fell off a cliff. 

The CNN Fear and Greed Index has been in Extreme Fear for more than a month now – currently sitting at 14, as seen in the illustration below.

The crypto market is holding up relatively well, spending a couple of weeks in Fear levels, currently at 30, after dropping into Extreme Fear last week. 

Looking back at the announcement of the Trump tariffs, participants in the AAII Investment Survey showed a decade-high level of bearishness, with 61.9 percent expecting negative returns over the next six months. Historically, only March 2009 and October 1990 showed higher levels of bearish sentiment. 

Other Relevant News 

• Strategy purchased 3’459 BTC between April 7 and April 13 at an average price of $82’618. – Link  
• Eric Trump announced the establishment of a new Bitcoin mining company. – Link 
• Crypto exchange OKX relaunches in U.S. two months after settling with DOJ for $500 million. – Link 
• Semler Scientific Files $500 million offering to fund Bitcoin acquisition. – Link

Looking Ahead: Trump versus Xi, Bitcoin’s New Role? Interesting New Dynamics 

Looking ahead, the developments in the trade war between the U.S. and China should be closely monitored over the coming days and weeks, as current tariff levels are not looking promising for global trade as we’ve known it over the past decades. It will be important to watch for any positive developments in the negotiations between Trump and Xi in this regard. 

While Bitcoin has started to decouple slightly from its role as a “risk-on asset” over the past few weeks, it remains to be seen whether this change in narrative is sustainable in the coming months. When looking at the price action of gold, one begs the question: when will Bitcoin finally accept its role as digital gold and follow its big brother in the upward trend? 

Another interesting point to keep in mind is Bitcoin’s relationship to global liquidity. Bitcoin appears to follow changes in the global money supply (M2) with a lag of about 90 days, and the recent drawdown in BTC’s price was predictable based on global liquidity trends. With global liquidity rising again in the first quarter of 2025, Bitcoin could be poised for a price increase in the coming months, based on this model. 

We also highlighted the potential of Ether in a chapter above. The fundamental and on-chain data for Ethereum show a positive outlook for the coming years. With Ethereum seemingly positioned to benefit from broader macro trends – such as the tokenization of real-world assets (RWAs) – it might be worth keeping an eye on Ethereum’s price action, especially considering it has already corrected more than 60 percent from its December 2024 high. 

Below, you can find some of the key data releases and events to watch out for next week. 

Monday, 21 April 2025 

Switzerland – Easter Holiday  

Thursday, 24 April 2025 

USA – Initial Jobless Claims, Continuing Jobless Claims 

USA – Atlanta Fed GDPNow 

Friday, 25 April 2025 

Switzerland – SNB Vice Chairman Schlegel Speaks 

USA – Michigan Consumer Sentiment 

USA – Michigan 1-Year and 5-Year Inflation Expectation