At first, it's puzzling. Trump is the most pro-crypto president ever.
Gensler is gone.
The SEC has dropped all major enforcement suits.
Trump relented (again) on the tariffs.
The FED (in FOMC minutes) signaled that they'll end QT as soon as this month.
$BTC is back up over $90k.
There is a crypto summit at the White House this Friday.
Yet, the CMC Fear and Greed Index reads 30, and the Alternative $BTC only index reads a 20.
1 What Can The Summit Accomplish?
From the lineup, we know that the Attorney General (Pam Bondi) and the Treasury Secretary (Scott Bessent) will be present. This matters because we might see a transfer of $BTC, currently held by US government, to the treasury as part of a stockpile.
It's good news, but it does not promise buying pressure.
A reserve (not a stockpile) will require an act of Congress.
The same point holds for most everything else.
Stablecoin regulation needs Congress.
Crypto protocol regulation needs Congress.
2 On The Macro Front
Tariffs are taking their toll.
While the initial concern was that tariffs would be inflationary, the concern now is that the resulting trade war will eliminate jobs and tilt the US into a recession.
The CME Fed Watch tool indicates an increase in the number of expected cuts this year to 3 (from 2).
In a strong economy, that's a good thing, but with deteriorating jobs numbers, this does not look like a "strong cycle" cutting pattern.
So, let's have a look at those job numbers.
3 The Job Numbers
The most recent report for private employers indicated that just 77,000 jobs were added in February. The expectation was 140,000+.
It's important to see this for what it is, however. It is a positive number. The US is not shedding jobs as you'd see in a recession.
Just as Trump's delay of tariffs doesn't eliminate them, so that the news is less good than you'd like, these numbers are less bad than journalists are making them out to be.
4 The Financial Sector
Typically, when the economy rolls over into a recession, you'll see the financial sector deteriorate quickly. As you notice in the image below, the financial sector (represented by the $XLF ) is well above its 200-day moving average.
That doesn't mean a recession isn't coming, but it does mean that the standard, credit cycle induced recession is not in the cards.
If the US falls into a recession, it would be for exogenous reasons--as COVID was an exogenous event that induced a recession
5 Concluding Thoughts
Pulling the strands together, we have the following points.
1. The Crypto Summit won't be able to deliver a meaningful catalyst.
2. Other data is mixed.
In that environment, anything non-BTC related tends to bleed. That's why market sentiment is low despite $BTC's price rebound.
For the bold, it's a buying opportunity. I prefer waiting a few days to see how things shake out. An extra 10% return isn't the thing that will change anyone's life.
DYOR. NFA.
Happy Trading!
-Sebastian Purcell, PhD
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