The shifting sands of global trade and the cryptocurrency surge

The shifting sands of global trade and the cryptocurrency surge

Key points:

  1. US Considers Tariffs: Trump explores reciprocal tariffs on Japan and South Korea, stirring trade tensions.
  2. Market Response Mixed: MSCI US index up 1.1%, but US Treasury yields drop, reflecting cautious optimism.
  3. Gold as Safe Haven: Gold prices rise to near US$3,000, signaling investor caution amid trade uncertainty.
  4. Oil Prices Stable: Brent crude at US$75/barrel, balanced by OPEC+ and US policy dynamics.
  5. Coinbase Soars: Revenue doubles to US$2.3 billion, showing crypto’s mainstream integration and growth.
  6. GameStop’s Crypto Pivot: Traditional retailer GameStop explores cryptocurrencies, signaling broader market acceptance.

The latest developments in global finance have painted a picture of both cautious optimism and bold new ventures on 14 February 2025. As tensions simmer over trade policies, particularly with the US signalling potential reciprocal tariffs against nations like Japan and South Korea, the market’s response has been a nuanced blend of relief and strategic positioning.

Meanwhile, in the digital realm, Coinbase’s latest financial revelations signal a robust mainstream integration of cryptocurrencies, showcasing a significant pivot in investment landscapes.

The tentative global risk sentiment can largely be attributed to the recent news regarding US tariffs. President Trump’s directive to explore reciprocal tariffs has cast a long shadow over international trade relations. The market’s sigh of relief stems from the hope that these tariffs might not be as punitive as initially feared, mirroring the recent adjustments with Canada and Mexico. This development suggests a possible softening of trade war rhetoric, which could lead to more stable investor confidence in the short term.

Yet, the reaction in financial markets shows a clear dichotomy. On one hand, the MSCI US index rose by 1.1 per cent, with materials leading the charge with a 1.7 per cent gain, indicating sector-specific optimism. Conversely, US Treasury yields have seen a decline, with the 10-year yield dropping 9.2 basis points to 4.53 per cent, and the 2-year yield falling by 4.8 basis points to 4.31 per cent. This could be read as the market bracing for potentially slower growth or inflationary pressures easing off, influenced by expectations that the Federal Reserve’s favoured inflation gauge might show softer numbers than anticipated.

The US Dollar Index’s slight decline by 0.6 per cent also speaks to this complex sentiment, where the dollar’s role as a safe haven is being re-evaluated against the backdrop of trade policy uncertainty. Meanwhile, gold’s upward trajectory towards US$3,000 per ounce, with a 0.8 per cent increase, underscores the lingering search for security in traditional safe-haven assets amidst geopolitical and economic uncertainties.

In the oil markets, Brent crude held steady at US$75 per barrel, showing that despite the trade tensions, OPEC+’s supply management and US policy dynamics under the Trump administration continue to exert influence on oil prices, keeping investors’ eyes peeled for any policy shifts or supply changes that could disrupt this balance.

Turning our gaze to the equity markets, Asian equities presented a mixed bag in early trading sessions, indicative of regional variations in response to global trade news. US equity futures suggested a flat opening, perhaps reflecting a cautious approach by investors, waiting to see how these trade negotiations pan out.

Amid these traditional market movements, a more disruptive narrative is unfolding with GameStop’s exploration into alternative asset classes, particularly cryptocurrencies like Bitcoin. This move by GameStop, traditionally a retailer, into digital assets is not just a business pivot but a signal of broader acceptance and integration of cryptocurrencies into mainstream investment portfolios. The social media interaction between GameStop’s CEO Ryan Cohen and Michael Saylor of MicroStrategy underscores this shift, aligning with a trend where traditional companies are looking to diversify into digital currencies to tap into new revenue streams or hedge against inflation.

This brings us to the stellar performance of Coinbase, which has not only met but significantly exceeded Wall Street expectations in its fiscal fourth quarter. Coinbase’s revenue doubled to US$2.3 billion from the previous year, with adjusted earnings per share soaring to US$4.68 from US$1.04. The boom in cryptocurrency trading, fuelled by both institutional and consumer interest, seems to have been amplified by the political climate, particularly post-Trump’s election, which has often been seen as crypto-friendly.

The detailed breakdown of Coinbase’s revenue shows a stark increase in transaction revenue by 172 per cent, reflecting the heightened activity in cryptocurrency markets. The growth in subscription and services revenue by 15 per cent, alongside significant increases in stable coin, Blockchain Rewards, and custodial fee revenues, paints a picture of a maturing ecosystem where various facets of cryptocurrency operations are gaining traction.

This surge in Coinbase’s performance isn’t just about numbers; it’s a narrative of how cryptocurrencies are becoming less of a fringe movement and more of a central player in the financial world. The election of President Trump, perceived by many in the crypto community as favourable due to his deregulatory stance and interest in digital currencies, has likely contributed to this momentum.

The road ahead for both global trade and the cryptocurrency sector is fraught with challenges. For global trade, the effectiveness of ongoing negotiations will determine whether we see a de-escalation or a further escalation of trade barriers. For cryptocurrencies, regulatory clarity, market volatility, and the integration into traditional finance systems remain significant hurdles.

To conclude, the interplay between traditional finance and emerging technologies like blockchain and cryptocurrencies will likely define the next era of economic evolution. The cautious optimism in markets, coupled with bold moves into digital assets by companies like GameStop, and the undeniable success stories like Coinbase, suggest we are on the cusp of a new financial paradigm. Yet, the journey is as much about managing risks as it is about embracing new opportunities, a balance that will test the mettle of investors, policymakers, and innovators alike.

 

Source: https://e27.co/the-shifting-sands-of-global-trade-and-the-cryptocurrency-surge-20250214/

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Market wrap: Inflation surprises, geopolitical shifts, and crypto’s resilience amid uncertainty

Market wrap: Inflation surprises, geopolitical shifts, and crypto’s resilience amid uncertainty

The global financial markets have been a whirlwind of volatility this week, driven by a hotter-than-expected US inflation report for January, shifting expectations for Federal Reserve policy, and unexpected geopolitical developments. As a journalist with a front-row seat to these unfolding events, I find myself reflecting on the broader implications for investors, policymakers, and the global economy.

The US core Consumer Price Index (CPI) for January came in at 3.3 per cent year-over-year, surpassing forecasts of 3.1 per cent and inching up from the prior reading of 3.2 per cent. This stubborn inflationary pressure has sent ripples through bond markets, equities, and even the nascent crypto space, while President Donald Trump’s surprising move to negotiate an end to the Russia-Ukraine war adds another layer of complexity.

In this article, I’ll unpack these developments, explore their interconnected impacts, and offer my perspective on where we might be headed next.

Let’s start with the inflation data, which has dominated headlines and reshaped market sentiment. The January core CPI print of 3.3 per cent was a stark reminder that inflation, despite the Federal Reserve’s aggressive efforts, remains a persistent challenge. Economists and markets had anticipated a slight cooling to 3.1 per cent, but the unexpected uptick—driven in part by soaring egg prices (up 15.2 per cent in a month), rising rents, and higher gas and food costs—has forced a recalibration.

Posts on X captured the immediate reaction, with many users noting the surprise and speculating on the Federal Reserve’s next moves. One post highlighted that core CPI, excluding volatile food and energy prices, has now remained above 3 per cent for 45 consecutive months, underscoring the stickiness of underlying inflation. This data, confirmed by reports from Reuters and other outlets, has significant implications for monetary policy.

Federal Reserve Chair Jerome Powell, in his second Congressional testimony this week, reiterated the Fed’s commitment to taming inflation but acknowledged that “more work” is needed. His words, while measured, did little to soothe markets, as traders pushed back expectations for the next rate cut from September to December. This shift, reflected in futures markets, signals a growing consensus that the Fed will maintain higher interest rates for longer, a scenario that could weigh on economic growth and risk assets.

The bond market’s reaction was swift and decisive. US Treasuries tumbled across the curve, with the 10-year yield rising 8.6 basis points to 4.621 per cent and the 2-year yield climbing 7.2 basis points to 4.355 per cent. The widening of the 2-year and 10-year yield spread by 2.2 basis points to 27.4 basis points suggests that investors are pricing in a more hawkish Fed stance in the near term, with longer-term yields reflecting concerns about sustained inflation. For bond investors, this is a challenging environment. Higher yields, while attractive for new buyers, mean mark-to-market losses for those holding existing Treasuries.

From my perspective, this dynamic underscores the delicate balancing act the Fed faces: tightening too aggressively risks tipping the economy into recession, but easing prematurely could allow inflation to spiral further. Powell’s testimony, while reaffirming the Fed’s resolve, left open questions about the pace and magnitude of future rate hikes, leaving markets in a state of heightened uncertainty.

Equities, predictably, felt the heat. US stocks initially fell sharply after the inflation data, with the MSCI US index ending the day down 0.3 per cent. The energy sector was the biggest underperformer, dropping 2.8 per cent, likely due to a combination of profit-taking and concerns about demand in a higher-rate environment.

However, tech buyers stepped in later in the session, helping to pare losses. This resilience in tech, despite rising yields, is noteworthy. It suggests that investors still see value in growth stocks, particularly in sectors like technology, which have been buoyed by strong earnings and innovation.

Yet, the broader market remains vulnerable. The S&P 500’s correlation with other risk assets, including cryptocurrencies, highlights the interconnectedness of today’s markets. Posts on X noted this linkage, with users pointing out that altcoins like Ethereum, XRP, and DOGE saw slight gains alongside the S&P 500, underscoring crypto’s sensitivity to equity market movements. For investors, this correlation is a double-edged sword: it amplifies gains during bullish periods but exacerbates losses when sentiment turns sour.

Speaking of cryptocurrencies, the crypto market has shown surprising resilience amid this week’s turbulence. Bitcoin and other major altcoins posted modest gains on Wednesday, a recovery that coincided with President Trump’s unexpected announcement of phone calls with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy to negotiate an end to the Russia-Ukraine war.

This development, reported by Bloomberg, marks a shift from previous US policy and has eased concerns about disruptions to Russian crude supplies. Brent crude, which fell 2.3 per cent to US$75.18 per barrel after US crude inventories rose, reflects this easing of geopolitical risk. For the crypto market, Trump’s move is a potential tailwind. Bitcoin, often seen as a hedge against geopolitical uncertainty, benefited from the news, with prices ticking higher. Ethereum, XRP, and DOGE followed suit, though gains were modest.

From my perspective, this recovery is encouraging, but it’s tempered by the broader macro environment. The stronger-than-expected US inflation data earlier in the week had initially pressured crypto prices, as higher rates typically weigh on speculative assets. Yet, the crypto market’s ability to rebound suggests that investor appetite for digital assets remains strong, particularly in light of institutional adoption.

On that note, Goldman Sachs’ latest filing with the Securities and Exchange Commission, published on February 12, 2025, caught my attention. The investment bank reported holding US$2.05 billion in Bitcoin and Ethereum ETFs as of the end of 2024, a significant increase from earlier quarters.

This move, detailed in reports from Cointelegraph and Decrypt, reflects a broader trend of institutional interest in cryptocurrencies. Goldman Sachs’ investments, split between BlackRock’s iShares Bitcoin Trust, Fidelity’s Wise Origin Bitcoin Fund, and Ethereum-focused ETFs, signal a growing acceptance of digital assets on Wall Street.

However, it’s worth noting that Goldman Sachs has historically been critical of cryptocurrencies, with executives like Sharmin Mossavar-Rahmani comparing the recent crypto enthusiasm to the tulip mania of the 1600s. This dichotomy—between the bank’s public skepticism and its substantial investments—raises questions. Is Goldman Sachs hedging its bets, or is it simply responding to client demand?

From my perspective, this tension highlights the evolving nature of the crypto market. Institutional adoption, fueled by a more favorable regulatory environment under the Trump administration, is driving growth, but skepticism persists. For retail investors, Goldman Sachs’ involvement is a double-edged sword: it validates the asset class but also introduces new risks, as institutional flows can amplify volatility.

Shifting focus to Asia, the latest economic data from India adds another layer of complexity to the global picture. Softer-than-expected industrial output and inflation figures have raised concerns that India, one of the world’s fastest-growing major economies, may be entering a softer growth patch.

Asian equity indices were mixed in early trading, reflecting uncertainty about the region’s trajectory. For investors, this is a reminder that global markets are interconnected, and weakness in one region can spill over into others.

From my perspective, India’s challenges underscore the uneven nature of the global recovery. While the US grapples with inflation, emerging markets like India face growth headwinds, creating a divergent policy landscape. For central banks, this divergence complicates coordination efforts, as rate hikes in the US could exacerbate capital outflows from emerging markets.

Looking ahead, the interplay between inflation, monetary policy, geopolitics, and risk assets will continue to shape markets. The US inflation data has dashed hopes for rate cuts in 2025, with traders now pricing in a more hawkish Fed stance. President Trump’s move to negotiate an end to the Russia-Ukraine war is a potential de-escalation, but its impact on energy markets and global risk sentiment remains uncertain. The crypto market, buoyed by institutional adoption and geopolitical developments, is showing resilience, but it’s not immune to macro pressures.

For investors, navigating this landscape requires a careful balance of caution and opportunism. From my perspective, the key takeaway is that uncertainty is the new normal. Inflation, while stubborn, is not insurmountable, but it will require sustained policy efforts. Geopolitical risks, while easing in some areas, remain a wildcard.

And cryptocurrencies, while volatile, are increasingly part of the mainstream financial system. As we move forward, staying informed, critically examining narratives, and remaining adaptable will be essential. The markets, as always, will test our resolve, but they also offer opportunities for those willing to navigate the complexity.

 

Source: https://e27.co/market-wrap-inflation-surprises-geopolitical-shifts-and-cryptos-resilience-amid-uncertainty-20250213/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j

Ethereum Layer 2: A Forensic Analysis of Growth, Challenges, and Economic Impact

Ethereum Layer 2: A Forensic Analysis of Growth, Challenges, and Economic Impact

Key Points:

Ethereum Spot ETF Performance: Ethereum spot ETFs saw significant inflows last week, with BlackRock’s ETHA and Fidelity’s FETH leading with $287 million and $97.28 million respectively, boosting their total assets to $4.4 billion and $1.51 billion.
Layer 2 Controversy: The surge in ETF inflows hasn’t directly boosted Ethereum’s market performance. The Ethereum community criticizes Layer 2 networks for being “parasitic”, causing inflation by profiting from transaction fees while relying on Ethereum’s security.
Layer 2 Sequencer Profits: Layer 2 networks like Arbitrum earn substantial profits from sequencer operations, highlighted by a $1.04 million daily revenue on February 4, with minimal cost to Ethereum, sparking debates over centralization and profit motives.
Decentralization Challenges: Layer 2’s struggle with decentralizing sequencers is noted, with most still controlled by development teams. This central control is a significant point of contention, as sequencers are lucrative due to transaction fees, MEV, and interest.
Base’s Sequencer Revenue: Base, part of the Ethereum network, has been accused of transferring all sequencer gains to Coinbase, with little transparency on how these profits are handled, leading to community suspicion about ETH sales.
Vitalik’s Response: Vitalik Buterin has acknowledged the issues surrounding Layer 2’s economic models, calling for these networks to contribute back to Ethereum to ensure ETH’s value doesn’t diminish in a Layer 2-dominated ecosystem.

Ethereum Spot ETFs Surge, But Layer 2 Controversy Clouds Market Optimism
Ethereum spot ETFs saw a net inflow of $420 million last week, and all nine ETFs had no net outflow. Among them, the net inflow of BlackRock’s ETHA reached 287 million U.S. dollars, allowing ETHA to exceed 4.4 billion U.S. dollars. Fidelity’s FETH also received a net inflow of 97.28 million U.S. dollars, reaching 1.51 billion U.S. dollars thus far. However, despite the strong growth in capital inflows from Ethereum Spot ETFs, they have not significantly contributed to Ethereum’s market performance or quelled many controversies in the Ethereum ecosystem, especially regarding the Layer 2 operating model.
Recently, many netizens have criticised on “X” that Layer 2 network is actually “parasitic” on Ethereum, becoming the main source of its inflation. While Layer 2 brings scalability and efficiency to Ethereum, the economic model and operational mechanisms behind it are increasingly being questioned. This analysis combines current market data with community voices to take a look at the current Layer 2 controversy within the Ethereum ecosystem. Or is it actually Ethereum layer 2 or bad actors?
In the current cycle, the performance of ETH has lagged significantly behind the market as a whole, and some people attribute it to the heavy load of layer 2’s and some blame the Ethereum Foundation (EF)! This weekend, Layer 2’s became the object of community criticism. On February 9, Andre Cronje, co-founder of Sonic, posted on X, expressed significant public protest that Layer 2’s made a lot of money by continuing to sell sequencer earnings and had become a parasite on Ethereum. “Becoming Layer 2 – running a centralised sorting machine – charging a fee of $120 million – paying Ethereum another $10 million for DA and security – then selling $110 million for a profit – then claiming to be the “Ethereum Alliance.” I don’t understand how the Ethereum community convinced itself to accept this logic.Layer2 has become the main cause of Ethereum inflation again.”
Explaining Sorters & Collators Layer 2 – Layer 2’s Sorter Gains
Layer 2’s sequencer revenue controversy has become a commonplace topic. The collator has an indispensable role within Layer 2 architecture, and its main utility is as follows:
  1. Collect user transactions and package them into batches in a specific order.
  2. Provide users with instant transaction confirmation before the transaction is finally on the chain.
  3. Submission of transaction data compression to Layer 1 to reduce gas costs.
In Layer2’s decentralised vision, the decentralisation of the sorter operation is an essential step. However, the reality is that almost all of Layer2’s collators are run by the development team, which is one of the biggest criticisms about Layer 2’s.
Why are Layer 2’s unable to complete the decentralisation of the sorter?
There are certain technical and operational reasons for this, but another big reason that cannot be ignored is that in the real world, sorting machines are a very profitable business. The primary sources of direct revenue from the operation of the sorting machine include: 1) transaction fee differences; 2) MEV capture; 3) Funds deposit interest.
DeepSeek provides Oracle on the other actors to blame and the following: How profitable is business?
We can take a cursory look through data from a single day on February 4 (Arbitrum) On February 4, because of the collective volatility of the market, Arbitrum charged $1.04 million at the Layer 2 level in a single day, while paying Layer 1 a final settlement cost of less than $20,000 – meaning that in just one day, the chain made millions of dollars in gains from trading fee spreads. (DeepSeek, 2025)
A look at Base again!
First with Winter Mute now on Layer 2. As the most active Layer 2 network on the Ethereum mainnet ecosystem, Base has long been at the centre of relevant public opinion. As the debate about the benefits of Layer 2 sorters intensified, the community began to take aim at Base. Lucidity CIO ,Mr. Santisa took the lead on X, accusing Base of transferring all the sequencer gains to Coinbase since the launch of its own network, and there is reason to suspect that this ETH has definitely been sold off. “Since its launch, BASE has been transferring sorter fees to Coinbase. We don’t know if they sold it, but we do know that they didn’t deploy the funds on Base or keep them on-chain. In the absence of further transparency, we can reasonably assume that they have sold off. They don’t agree with Ethereum’s stance.” (Santisa, 2025)
The figure shows the Base sorter income address
(0xEc8103eb573150cB92f8AF612e0072843db2295F) Close analysis, combined with Coinbase’s earnings data was used to analyse whether Base had sold the ETH in question. Thorough post mortem analysis and on-chain data showed that Base had earned significant income through sorters within the past 12 months. Over $100 million in revenue, with a profit margin of over 90%, all of these fees have been transferred to the exchange via the Base-Ethereum-Coinbase network path. According to Coinbase’s public earnings data, as of June 30, 2023 Coinbase held about $230 million in ETH on its balance sheet, when the price of ETH was $1,934, which means Coinbase held 118,924 ETH; As of September 30, 2024, Coinbase held 119696 ETH on its balance sheet. Suspicious indeed.
Suspiciously since the launch of Base, Coinbase only added 772 ETH to its balance sheet, so where did the hundreds of millions of dollars of Base sequencer revenue go? There seems to be only one answer! One might question that Base’s revenue, as a (notionally) independent network, and should not be counted on Coinbase’s balance sheet, this is unreasonable, as Coinbase has highlighted Base’s increased revenue in multiple financial statements. “The Ethereum community is proud of their Layer 2, but what Layer 2 does every day is transfer fee revenue from Layer 2 to Layer 1 and then to Coinbase to sell. This is the frontrunner of the Ethereum ecosystem. The Ethereum community wake up.” Base (Coinbase) on SOL with wintermute and now with Ethereum Layer 2.
Vitalik is Overwhelmed!
As of the posting, Vitalik has not responded to the accusations made by netizens other Ethereum community members, but in his January 24 self-written article, under the pressure of public opinion, Vitalik sends out a message calling out L2 proprietors: “Back for ETH,” a permutation of Vitalik’s frustration with the current state of Layer2’s operations is visible.
Vitalik said in the article that it is necessary to clarify the economic model of ETH to ensure that ETH continues to accumulate value in a Layer2-intensive world.
On an executive level, Vitalik encourages Layer 2 to support ETH by contributing a percentage of its fees, providing a permanent support mortgage and donating the proceeds to Ethereum mainnet.

By @LarryMetaTrust CSO, HashAi and @anndylian, Blockchain Expert & Author / Graphics by @Crypt0JayBear

Source: https://x.com/OfficialHashAI/status/1889758949681090841

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j