Crypto Markets Daily Feb 03 2025
President Trump's long awaited tariff program has caused a knee-jerk reaction in crypto markets which have led the risk-off move. BTC temporarily crashed to $91K with both BTC and ETH's term structures inverting. ETH perp funding rates have dropped to -0.07%, and a basket of the Trump Trade altcoins have posted double digit losses.

Daily Update:
- President Trump passed an Executive Order over the weekend announcing his long awaited program of 25% tariffs on Mexico and Canada, and an additional 10% tariff on China, the three largest trading partners of the U.S. The President excluded oil
- In response to his tariff program, Canadian PM Justin Trudeau has said the country will impose a 25% tariff against US goods and Mexican President Claudia Sheinbaum has also promised a retaliation. The Commerce Ministry in China has promised to file legal action with the World Trade Organisation, however has fallen short of any immediate counter tariff measures.
- The dollar has rallied over fears of the inflationary pressures tariffs may bring to the U.S., forcing the Fed to keep interest rates higher for longer.
- Just as we saw during the August unwind of the Yen carry trade, Bitcoin and cryptocurrency assets have led the risk-off move. BTC fell from $106K on Friday down to $97K through Sunday evening before plunging further to $92K as Asian stock markets opened today.
- Altcoins however have felt a greater knee-jerk reaction – ETH fell as much as -28.41% below its close on Friday (while recording its largest intraday loss since May 2021). The shakeout has pushed the ETH / BTC pair to its lowest level since late 2020.
- Many of the Trump Trade altcoins have posted double digit losses: Dogecoin is down 23% on the day, as is XRP. Amongst the top 20 tokens by market-cap (excluding stablecoins and BTC) Solana is the only token in a single digit percentage loss. In total, $600B has been wiped from the total crypto market cap.
- Just as Bitcoin has held up the strongest in spot markets, it has done the same in derivatives markets. Funding rates for BTC flipped to negative, but ETHs dropped as low as -0.07%. While both BTC's and ETH's implied vol term structures inverted, short-tenor ETH volatility spiked above 110%, its highest levels since the FTX collapse in November 2022. Short-tenor volatility smiles skewed strongly towards the downside, with 25delta puts assigning a 15 vol point premium over calls.
This Week’s Calendar:

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