Trade Tensions Spark Market Declines, Crypto Sentiment Remains Subdued

QCP's daily market observation highlighted the escalating trade tensions following Trump's announcement of a 25% tariff on car imports, effective from April 3rd. This move, coupled with retaliatory tariffs on major trading partners, has injected new uncertainty into the global trade environment. The stock markets in Japan and South Korea have seen declines, with automobile stocks being particularly affected.

In the crypto market, sentiment remains subdued despite some notable developments. GameStop's announcement to raise $1.3 billion for Bitcoin allocation did not significantly boost overall market sentiment. However, there has been a continued inflow of funds into Bitcoin ETFs, totaling $9.449 billion since March 14th. In contrast, Ethereum ETFs saw an outflow of $1.121 billion during the same period, indicating a divergence in institutional confidence. On-chain developments offer a glimmer of hope for ETH.

Looking ahead to the options expiration, BTC options with a notional value of $12.2 billion will expire at a maximum pain point of $85,000. BTC has already begun to slide from Monday's high, and the front-end volatility for BTC and ETH has dropped by 10 volatility points. Spot trading remains flat, and open interest contracts continue to decline, indicating a lack of optimism in the market. With the PCE index data set to be released, the short-term upside remains limited as the market awaits Trump's next move in this escalating trade war.