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QCP: Tariff Escalation Exacerbates Crypto Market Volatility, Further Stock Market Decline May Lead to Bitcoin Breaking Below $75,000 Support
BlockBeats News, April 9th, QCP released its daily market observation stating that the market continued to decline overnight following the United States' implementation of a new round of tariffs on China. Volatility remains high, with the VIX staying above 40 for the third consecutive day. Even traditional safe-haven assets failed to play their intended role. Safe-haven assets were unable to provide effective hedging, as both gold prices and US bonds saw sell-offs due to investors seeking to reduce risk and meet margin calls.
The Trump administration showed signs of pressure with a lower-level refinancing strategy for US debt, as the entire yield curve experienced a surge. The 10-year US Treasury bond yield reached a peak of 4.50%, while the 30-year yield briefly surpassed 5%. Credit spreads continued to widen, reflecting a general deterioration in risk sentiment. Instead of shifting course, President Trump seemed to be employing a Martingale strategy, doubling down with each retaliatory move.
The market is now pinning its hopes on two possibilities: Trump's market support measures or the Fed's market support measures for reinforcement. However, both seem unlikely to materialize immediately. With the unemployment rate remaining steady and signs of inflation recovery, the Fed may maintain the current interest rates in the foreseeable future. This contrasts with the market's pricing, as the market anticipates four rate cuts in 2025, including speculation about intermeeting rate cuts.
Bitcoin traded sideways around the $75,000 level, but if the stock market experiences another significant drop, this level may crumble. Ethereum continued to underperform, dropping to $1,400, its lowest level since early 2023. With increased volatility, cryptocurrency yield strategies are once again in focus. Rising implied volatility provides an enticing opportunity for earning returns through structured trades.
