BTC Market Weekly Report: Trade War Enters a New Phase, Global Assets Hit Bottom

This week, the price of Bitcoin has shown an upward trend, rising from $78370.15 at the beginning of the week to $84733.07 by the weekend, with a weekly increase of 6.84% and a volatility of 14.89%. The trading volume has significantly increased compared to previous periods. It is worth noting that the BTC price has broken through the upper boundary of the descending channel for the first time since late January and is approaching the 200-day moving average.

The main variables of the global macro financial market remain the so-called "reciprocal tariff war." The dramatic evolution of this policy has attracted global attention, and China's countermeasures are particularly noteworthy. In this "collision game," the side that shows weakness first is likely to be at a disadvantage. This tariff war against the world has triggered a strong reaction from politics, business, and finance, ultimately leading to a massive outflow of capital from the U.S. market, with the U.S. stock market, bond market, and foreign exchange market being rarely hit hard at the same time.

In the face of the impending financial crisis, the U.S. government has chosen to make concessions, including partially postponing the implementation of reciprocal tariffs, reducing the intensity of tariffs, and expanding the list of exempted goods. At the same time, the U.S. has released goodwill signals to its main competitors in the realm of public opinion. Thus, the "reciprocal tariff war" is gradually entering its second phase, where all parties will begin to negotiate and compromise.

The risk asset market, which had previously seen a sharp decline due to the first phase of the tariff war, has since rebounded. Although the most severe phase of the tariff war may have passed, the chaos it has caused will continue to affect various markets. In the future, the focus of the market will be on whether the tariff conflict will escalate further, whether the Federal Reserve will "timely" lower interest rates, and whether the U.S. economy will fall into recession.

In terms of policy and macroeconomics, due to the difficulty most countries face in effectively countering "reciprocal tariffs", China and the European Union have become the main forces resisting U.S. unilateralism, with China’s countermeasures being particularly strong. After several rounds of negotiations, the U.S. has raised tariffs on China to 145%, while China's counter-tariffs on the U.S. have reached 125%. This has seriously affected the normal trade exchanges between the two countries, leading China to subsequently announce that it will no longer respond to possible further tariff increases by the U.S.

On April 10, the United States announced a suspension of reciprocal tariffs on most countries (excluding China), retaining only a 10% "baseline tariff" and beginning negotiations with these countries. This news drove a significant rise in U.S. stocks, with the Nasdaq index recording the second-largest single-day gain in history. Although China appears to be in a passive position, its firm stance has actually exerted immense pressure on the U.S. On April 12, the U.S. announced the exemption of a portion of Chinese goods from the 145% "reciprocal tariffs", including smartphones, tablets, laptops, semiconductors, integrated circuits, flash memory, and display modules.

Not only China's countermeasures have pushed the U.S. government into the "second phase," but also the strong opposition voices from the U.S. political, business, and financial markets. On April 7, the three major U.S. stock indexes hit their lowest points during the adjustment period, with some indices entering or nearing a technical bear market. The next day, the VIX fear index surged to 52.33, marking the third highest peak since the 2008 subprime mortgage crisis and the 2020 COVID-19 pandemic crisis.

At the same time, the U.S. Treasury market also experienced significant volatility. Short-term Treasury yields fell to 3.8310% on Thursday, while long-term Treasury yields rebounded sharply on Friday, closing at a high of 4.4950%. After a massive sell-off in the stock market, funds in the bond market also joined the selling spree. Additionally, with funds flowing from the U.S. to regions like Europe, the dollar index also saw a significant decline.

The "three kills" situation in the stock market, bond market, and foreign exchange market has forced the US government to release signals to ease the trade war and announce a list of exempted products. At the same time, the Federal Reserve also sent out "dovish" signals. Boston Fed President Collins stated in a media interview on Friday that the Fed is "absolutely ready" to use various tools to stabilize the financial markets when necessary.

The easing of the trade war and the verbal commitments from the Federal Reserve have temporarily alleviated the U.S. financial markets. On Friday, the three major U.S. stock indices ended a turbulent week with gains. However, considering the unpredictability of the U.S. government and the recession and inflation risks facing the U.S. economy (the University of Michigan Consumer Sentiment Index released this week continued to decline to 50.8), the likelihood of a V-shaped recovery in the market is low.

In the Bitcoin market, the selling pressure from both short-term and long-term holders has weakened this week, slightly alleviating the panic selling that has persisted for three consecutive weeks. The total on-chain selling volume for the week was 188,816.61 BTC, with short-term holders selling 178,263.27 BTC and long-term holders selling 10,553.34 BTC. On the 7th and 9th, short-term holders experienced large-scale losses again amid global market panic.

Currently, the long-term holder group is still acting as a market stabilizer, increasing their holdings by nearly 60,000 BTC this week, indicating that market liquidity remains quite scarce. By the weekend, the short-term holder group as a whole is still at a 10% loss level, indicating that the market is still under immense pressure.

According to market cycle indicators, BTC is currently in a rising continuation phase. Despite the many uncertainties in the global macro environment, the Bitcoin market shows a certain degree of resilience. Investors should closely monitor the direction of global economic policies and their potential impact on the cryptocurrency market.