To receive the Morning Note in your inbox, subscribe here: https://stormrake.substack.com/
The trade wars have gotten off to a rough start for all markets. Following the official imposition of US tariffs on Canada, Mexico, and China, Canadian Prime Minister Justin Trudeau has responded with a retaliatory 25% tariff on $155 billion worth of US goods. In turn, President Trump has threatened to escalate tariffs on Canada in response to Trudeau’s move. We now eagerly await President Xi’s reaction, which could have significant market implications.
The threat of tariffs was no surprise—after all, it was a key selling point of Trump’s campaign to ‘save’ the US economy. However, now that the reality is here, markets have reacted negatively.
Traditional Markets Struggle to Recover
Traditional Markets Struggle to Recover
Just a week after the DeepSeek AI-driven market crash, markets have barely had a chance to breathe. Traditional indices like the Nasdaq and S&P 500 continue to suffer, with Nasdaq futures opening 600 points down and S&P 500 futures dropping 120 points this morning. Meanwhile, the VIX—an index that measures market volatility—is set to open over 10% higher than its previous close. Both indices are now trading lower than they were in the immediate aftermath of last week’s crash.
Crypto Market Hit Hard as Bitcoin Falls Below $100K
Crypto Market Hit Hard as Bitcoin Falls Below $100K
This turmoil has bled into the crypto market as well. Bitcoin has now slipped back under $100K, currently trading at $96.7K—lower than it was during last week’s crash. Ethereum has dropped below $3,000, and Solana has once again fallen under $200.
Since Bitcoin’s high of $106K on Friday, it has retraced 8%, while Ethereum is down 17% and Solana 19%. All the hard work Bitcoin did to reclaim $100K and set up for a retest of all-time highs has been wiped out in just one weekend. This volatility serves as a reminder: having a clear long-term investment strategy is essential. Short-term swings can shake out weak hands, but those with long-term conviction will survive and ultimately prosper.
What Does This Trade War Mean for Crypto?
What Does This Trade War Mean for Crypto?
In the short term, expect more volatility. Altcoins have been decimated, and this is the period where conviction matters most. Investors with a strong belief in their chosen projects will see these 20%+ drops as opportunities to dollar-cost average. Even the strongest altcoins, like Sui and Ondo, have plunged 25% in recent days, yet those who remain confident in these projects are likely to take advantage of these discounts and reap the rewards when the market turns around.
Long term, nothing changes. Despite the current correlation with traditional markets, Bitcoin and crypto remain in a bull run, and a crypto-friendly US administration will continue to be a tailwind. These trade wars may create short-term fear, but they do not alter the bigger picture.
There are still major bullish catalysts ahead this year:
- Interest rate cuts
- The US government’s digital asset stockpile, which will see the US government begin accumulating Bitcoin (and potentially other cryptocurrencies) in its reserves
Last week, we saw the head of the Czech National Bank propose a plan to buy Bitcoin with their reserves. The play here is obvious: take advantage of the market-wide discounts, pick up Bitcoin, and then sit back and relax. Ignore the short-term noise—conviction is how you win in Bitcoin.
Stormrake Spotlight: Ethereum (ETH) ($2,842)
Stormrake Spotlight: Ethereum (ETH) ($2,842)
Since the last morning note, Ethereum has fallen 15%, breaking through the accumulation zone after setting up for a breakout. ETH is now testing a major support level that has historically acted as a key area for reversals.
This level should hold as strong support, making it a potential point for Ethereum to stabilise and reverse. However, if macroeconomic conditions remain bearish and continue to weigh on markets, ETH could fall further.
BTC/USD Key Levels and Price Action:
BTC/USD Key Levels and Price Action:
Bitcoin is now testing key support at $95.7K, as the trade war intensifies. The selling pressure has been relentless, with BTC slicing through previous support levels with ease. If $95.7K fails to hold, Bitcoin is likely to retest a major prior support level at $92.5K.
BTC Total ETF Flows for 2 Feb: $ (data not available)
(ETF flow data is sourced from https://farside.co.uk/btc/ and reflects figures at the time of writing.)
ETH/USD Key Levels and Price Action:
ETH/USD Key Levels and Price Action:
On the short-term time frame, Ethereum continues to break below key levels with little support. ETH has now fallen below $2,865, where buyers previously stepped in. However, buying momentum seems to have dried up as selling pressure persists.
If ETH does not reverse soon, the next major downside target is $2,555.
ETH Total ETF Flows for 2 Feb: $ (data not available)
(ETF flow data is sourced from https://farside.co.uk/eth/ and reflects figures at the time of writing.)
*All prices are denominated in USD unless stated otherwise*
Written by Alexandar Artis
Create a brokerage account today
No Advice Warning
The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.
Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.
Disclaimer
All statements made in this newsletter are made in good faith and we believe they are accurate and reliable. Stormrake does not give any warranty as to the accuracy, reliability or completeness of information that is contained here, except insofar as any liability under statute cannot be excluded. Stormrake, its directors, employees and their representatives do not accept any liability for any error or omission in this newsletter or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided in this newsletter is owned by Stormrake. You may not alter or modify this information in any way, including the removal of this copyright notice.Copyright © 2024 Stormrake Pty Ltd, All rights reserved
