Global risk sentiment holds steady amid tariffs, AI optimism, and crypto shifts

Global risk sentiment holds steady amid tariffs, AI optimism, and crypto shifts

The financial landscape is navigating an ever-shifting environment, with risk sentiment holding steady despite significant macroeconomic developments on 11 February 2025.

One of the most notable events in recent days has been President Donald Trump’s decision to impose a 25 per cent tariff on all steel and aluminium imports, a move that includes key trading partners like Mexico and Canada without any exemptions. This policy, enacted under Section 232 of the Trade Expansion Act, has sent shockwaves through global markets, raising fears of potential trade conflicts and their broader economic fallout.

Trump has also hinted at the possibility of further increasing these tariffs and suggested the introduction of reciprocal tariffs, which could be announced as early as today or Wednesday. These developments have heightened market uncertainty as investors and analysts closely monitor whether these threats will materialise and how they might reshape global trade dynamics.

At the same time, the US corporate earnings season has provided a stabilising force, with strong performances from American companies reinforcing confidence in the economy’s underlying health.

However, the interplay between these macroeconomic and microeconomic factors, alongside other global trends such as Japan’s potential reclassification of cryptocurrencies and significant Bitcoin acquisitions by firms like Strategy (formerly MicroStrategy), paints a multifaceted picture of the current financial environment.

In this article, I will explore these developments in detail, analyse their potential impacts, and offer my perspective on how they shape the global risk sentiment.

Tariffs and market reactions

Let’s start with the tariff announcement, which has dominated financial news and market discussions in recent days. President Trump’s decision to impose a 25 per cent tariff on steel and aluminium imports under Section 232—a provision that allows the president to restrict imports deemed a threat to national security—marks a significant escalation in US trade policy.

Unlike previous tariff actions, which often included exemptions for key allies, this move explicitly excludes Mexico and Canada, two of the United States’ largest trading partners. This lack of exemptions has raised concerns, as it signals a more aggressive and unilateral approach to trade policy. Trump’s comments over the weekend and his warning that tariffs could “go higher” have added to the uncertainty, with market participants now bracing for the possibility of reciprocal tariffs.

Reciprocal tariffs, if implemented, would involve matching the tariff rates of other countries on US exports, potentially triggering retaliatory measures from affected nations. The timing of these potential announcements—possibly today or Wednesday—has kept markets on edge, as investors weigh the risks of a broader trade conflict.

From a market perspective, the immediate reaction to the tariff news has been varied. US equity indices, as measured by the MSCI US Index, rose by 0.7 per cent on Monday, with strong performances in the energy sector (+2.2 per cent) and information technology (+1.5 per cent). This resilience suggests that, for now, investors are focusing on the positive fundamentals of American companies rather than the potential negative impacts of tariffs.

The US earnings season has been particularly strong, with many companies surpassing expectations despite what analysts had considered a high bar. This strength in corporate fundamentals has provided a buffer against the macro uncertainties, supporting risk sentiment in the short term.

However, the longer-term implications of tariffs cannot be ignored. Tariffs on steel and aluminium could increase input costs for industries such as manufacturing, construction, and automotive, potentially squeezing profit margins and stoking inflation. If reciprocal tariffs are introduced, US exporters could face higher costs in foreign markets, further complicating the economic outlook.

Turning to the bond market, US Treasury yields ended Monday’s session with mixed results. Shorter-term yields, such as the two year and seven year, edged lower, reflecting some caution among investors about the near-term economic impact of tariffs.

Conversely, longer-term yields, including the 10-year (+0.2 basis points to 4.497 per cent) and 30-year (+1.4 basis points to 4.707 per cent), inched higher, suggesting that investors expect inflationary pressures from tariffs to persist over the longer term. This divergence in yield movements highlights the uncertainty surrounding the Federal Reserve’s next moves. Tariffs, by increasing costs and potentially delaying rate cuts, could complicate the Fed’s efforts to balance inflation and growth.

The US Dollar Index, meanwhile, rose by 0.3 per cent, reflecting safe-haven demand amid the tariff-related uncertainty. Gold, a traditional safe-haven asset, surged by 1.7 per cent to a fresh record high, underscoring investor concerns about geopolitical and economic risks. In the energy market, Brent crude oil prices rose by 1.6 per cent, supported by signs of a tighter market and geopolitical tensions, including Russia’s failure to meet its OPEC+ quota and rising natural gas prices in Europe.

Asian markets and crypto regulations

In Asia, the HSCEI index rose by 2.1 per cent for the third consecutive day, driven by optimism surrounding DeepSeek’s AI model and a perception that tariff tensions might be less severe than feared. However, early trading sessions on Tuesday showed mixed results for Asian equity indices, with US equity futures pointing to a lower open. This divergence highlights the uneven impact of tariff-related developments across regions.

While US markets have been buoyed by strong earnings, Asian markets remain more exposed to trade risks, given their reliance on exports. The resilience of risk sentiment in Asia, particularly in China, can also be attributed to positive developments in the AI sector, with companies like DeepSeek demonstrating resilience despite trade tensions. However, the broader implications of tariffs on global supply chains and economic growth remain a concern, particularly for export-dependent economies.

Shifting focus to other global developments, Japan’s Financial Services Agency (FSA) is considering a significant regulatory change that could reclassify cryptocurrencies as securities. This potential shift, which could take effect by 2026, would have far-reaching implications for retail investors and the broader financial ecosystem. By classifying crypto as securities, Japan aims to strengthen investor protections, lower taxes on crypto investments, and enable domestic funds to invest in tokens.

This move could also pave the way for the approval of crypto exchange-traded funds (ETFs), including spot Bitcoin ETFs, which would attract institutional capital and boost market liquidity. Posts on X have highlighted the FSA’s plans, with some users speculating on the potential for tax cuts and ETF approvals.

However, these reports remain inconclusive, and the FSA’s final decision will depend on a comprehensive review of existing regulations. If implemented, this reclassification could position Japan as a leader in the global crypto market, potentially offsetting some of the negative sentiment surrounding tariffs.

Another notable development in the crypto space is the recent acquisition by Strategy (formerly MicroStrategy) of 7,633 Bitcoin for US$742 million between February 3 and February 9, at an average price of US$97,255 per Bitcoin. The firm now holds 478,740 Bitcoin, worth over US$46 billion, with an average purchase price of US$65,033 per Bitcoin.

This acquisition, representing 2.2 per cent of Bitcoin’s total supply, underscores the growing institutional interest in cryptocurrencies as a store of value and hedge against inflation. Strategy’s aggressive Bitcoin strategy has been closely watched by investors, with some viewing it as a bullish signal for the crypto market.

However, the timing of this acquisition, amid tariff-related uncertainty and rising gold prices, raises questions about the firm’s risk management approach. While Bitcoin has historically been seen as a safe-haven asset, its volatility and correlation with risk assets like equities could complicate its role in a tariff-driven market environment.

Balancing risk and optimism

From my perspective, the current global risk sentiment is a delicate balance between optimism and caution. On one hand, the strength of US corporate earnings and positive developments in sectors like AI and crypto provide a foundation for resilience. The MSCI US Index’s gains, driven by energy and tech, reflect confidence in the underlying fundamentals of the economy.

Similarly, Japan’s potential reclassification of crypto and Strategy’s Bitcoin acquisition signal growing institutional acceptance of digital assets, which could support risk sentiment in the longer term. On the other hand, the tariff announcement and the threat of reciprocal tariffs introduce significant uncertainty.

Tariffs, by increasing costs and disrupting supply chains, could stoke inflation and weigh on economic growth. The mixed performance of US Treasury yields, the surge in gold prices, and the rise in Brent crude oil all point to heightened concerns about the macroeconomic outlook.

In my view, the key question for markets is whether the positive microeconomic factors—such as strong earnings and innovation in AI and crypto—can continue to offset the negative macroeconomic risks posed by tariffs. While US markets have shown resilience so far, the potential for retaliatory measures from trading partners like China, Mexico, and Canada could escalate tensions and disrupt global trade.

For Asia, the optimism surrounding DeepSeek’s AI model and less severe tariff fears may provide temporary relief, but the region’s exposure to trade risks remains a concern. Japan’s potential crypto reclassification, if implemented, could be a game-changer, attracting capital and boosting sentiment. However, the success of this move will depend on the FSA’s ability to balance investor protections with market growth. Strategy’s Bitcoin acquisition, while bullish for crypto, also highlights the challenges of navigating a volatile market environment.

In conclusion, the global risk sentiment is supported by a combination of strong corporate fundamentals and positive developments in AI and crypto, but it remains vulnerable to tariff-related uncertainties. President Trump’s tariff announcement, under Section 232, has introduced significant risks, with the potential for reciprocal tariffs adding to the complexity. While US markets have been buoyed by earnings, the longer-term implications of tariffs on inflation, growth, and trade dynamics cannot be ignored.

In Asia, optimism surrounding AI and crypto provides a counterbalance, but the region’s exposure to trade risks remains a concern. Japan’s potential crypto reclassification and Strategy’s Bitcoin acquisition are positive signals, but their impact will depend on broader market conditions. As markets navigate this busy macro news backdrop, the interplay between microeconomic resilience and macroeconomic risks will shape the trajectory of global risk sentiment in the coming weeks and months.

 

Source: https://e27.co/global-risk-sentiment-holds-steady-amid-tariffs-ai-optimism-and-crypto-shifts-20250211/

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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Asia-Pacific Leads World in Crypto Adoption Amid Bitcoin’s $100,000 Rally

Asia-Pacific Leads World in Crypto Adoption Amid Bitcoin’s $100,000 Rally

It’s a milestone that’s been on global cryptocurrency enthusiasts’ minds for many years: Bitcoin’s recent rally to a value of $100,000. At the same time, Bitcoin’s surge helped uncover Asia’s sky-high enthusiasm for crypto adoption and development.

The scale of Bitcoin’s ongoing rally is the topic of much debate, but its resonance in Asian economies appears assured regardless of the direction that the cryptocurrency takes in the months ahead.

According to the 2024 Global Crypto Adoption Index, Central & Southern Asia and Oceania (CSAO) lead the world in crypto adoption, accounting for seven of the top 20 most active nations for both centralized and decentralized finance (DeFi) protocols.

At the forefront of this growth was Indonesia, which surpassed $30 billion (475.13 trillion rupiah) in cryptocurrency transactions between January and October 2024, representing a growth of over 350 percent in comparison to the same period in 2023.

However, we’re also seeing widespread change at an institutional level, which could see significant growth in the number of cryptocurrency use cases in 2025 and beyond throughout the region. With interest in crypto reaching new levels in the Asia-Pacific, Bitcoin is becoming more accessible than ever before.

Bitcoin’s recent growth has brought a series of watershed moments for Asian adoption of crypto. In November, ZA Bank, Hong Kong’s first and largest digital bank, became the continent’s first institution to offer cryptocurrency trading services directly to retail investors. With ZA Bank’s app, it’s possible for users to trade cryptocurrencies like Bitcoin and Ethereum without the need for switching platforms in the process.

In November 2024, Japanese firm AEON announced the launch of a QR code payment system on Binance’s BNB Chain with Terminus, helping to scale crypto payment accessibility in East Asia.

The tools are intended to make cryptocurrency payments a seamless experience for users and merchants, and the initiative could help leverage more offline cryptocurrency payments throughout the region.

Cryptocurrency payments have been identified as a leading payment trend due to their flexibility and security qualities, and opening the door to making purchases with coins like Bitcoin represents a major step toward acceptance.

We’re also seeing Asian firms making strides in expanding investment opportunities at an institutional level.

Focused on leveraging Bitcoin as a primary reserve asset to optimize financial strategies and drive stakeholder value, Sora Ventures has launched a $150 million fund to grow Bitcoin-focused investment strategies among listed companies throughout Asia. Targeting companies listed on major stock exchanges throughout Japan, Hong Kong, Thailand, Taiwan, and South Korea, the move is a conscious effort to replicate the success of MicroStrategy’s Bitcoin reserve model in the United States.

In the month following the U.S. presidential election, which saw both Wall Street and cryptocurrency markets embark on a rally off the back of Donald Trump’s victory, Bitcoin grew by 30 percent. That’s over twice the 14 percent growth rate experienced by the Roundhill Magnificent Seven ETF (MAGS), an exchange-traded fund that focuses on Wall Street’s seven largest companies by market capitalization.

The expansion of investment options for Asia’s largest firms can open the door to better-managed growth, and the ability to embrace the historical outperformance of cryptocurrencies like Bitcoin fully.

It’s also important to highlight Asia’s invaluable role among crypto developers, with the continent surpassing North America in recent years to attain a strong market share. Since 2015, Asia’s share of global cryptocurrency developers has surged from just 13 percent to 32 percent, while North America’s market share fell from 44 percent to 25 percent over the same period.

While India has been a driving force in Asia’s newfound crypto dominance, nations like China, Japan, Hong Kong, and Singapore have all helped to build a conducive infrastructure for crypto developers.

According to Singapore-based fund manager Anndy Lian, in the emerging markets of India and Southeast Asia, where traditional banking infrastructure can be less accessible, cryptocurrencies like Bitcoin have helped to democratize financial services to residents. It’s this necessity for innovation that appears to be positioning the Asia-Pacific at the forefront of crypto innovation, and the benefits are being reaped by retail investors and institutions alike.

According to a recent National Thailand report, nations like Thailand, Indonesia, and the Philippines possess high smartphone penetration rates, making cryptocurrency far more accessible during its ongoing market rally. As a result, we could see far more sustained adoption rates for crypto and DeFi services developed locally.

Despite clear indications that Asia is embracing the ongoing cryptocurrency rally more enthusiastically than ever before, a number of challenges remain.

Cryptocurrency is famously volatile and open to exploitation among unwitting users. With Bitcoin’s historical bull runs giving way to substantial losses, both retail and institutional adopters will need to be wary of buying into crypto.

Asia is also contending with cryptocurrency crime, which could become more widespread as adoption grows. Forbes recently reported that addresses in China received more than $37.8 million in cryptocurrency between January 2018 and April 2023, with links being made to illegal fentanyl sales being made using crypto payments on a major scale. This may call for regulatory oversight capable of rapidly adapting to an industry that’s famous for its unpredictability.

For all its problems, Bitcoin’s recent surge beyond $100,000 serves as a reminder of the vast potential of the cryptocurrency industry. By responsibly embracing the potential of crypto, the Asia-Pacific can become more prosperous, economically flexible, and accessible to all residents.

Despite its famous volatility and concerns over misuse, the long-term potential of cryptocurrency is bright, and Asia is well-positioned to become a world leader in crypto innovation.

 

 

Source: https://thediplomat.com/2024/12/asia-pacific-leads-world-in-crypto-adoption-amid-bitcoins-100000-rally/

 

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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Chinese Investors Face Heavy Losses in Crypto Investments Amid Market Downturn

Chinese Investors Face Heavy Losses in Crypto Investments Amid Market Downturn

A recent survey of Chinese investors revealed that crypto enthusiasts have faced a difficult year. It noted that out of 574 respondents, around 59.8% reported losses in their crypto investments this year.

Among them, only 23% managed to see a profit. Out of the remaining lot (17.2%), people indicated their investments neither gained nor lost value, showcasing the volatile nature of the market in 2024, according to the survey.

The crypto market struggles this year can be attributed to factors like tightening regulations, a global economic slowdown, and increased scrutiny from financial institutions.

Chinese investors faced an even more complex scenario due to its stringent regulation on cryptocurrency trading and mining. China’s central bank announced that all transactions related to cryptocurrencies will be illegal, including digital tokens like Bitcoin.

The People’s Bank of China identified virtual currency-related business activities to be illegal and shared that it can endanger the safety of people’s assets. However, recently, speculations have been rife that China may be reconsidering its stance on cryptocurrency.

Justin Sun, founder of blockchain-based platform TRON, shared a cryptic post earlier on X, stating, “China unbans crypto. What’s the best meme for this?”

Rumors of China unbanning cryptocurrency have persisted, with market observers like Sun noting this could impact the global crypto space massively. China used to be one of the largest markets for cryptocurrencies, and lifting the ban would mean an increase in trading volumes and a rise in prices.

Amid the speculation, industry experts like Anndy Lian have discussed the potential for China to reconsider its cryptocurrency restrictions if Donald Trump were to win the upcoming U.S. presidential election. However, Lian noted that given the strained relations between Trump and Chinese President Xi Jinping, a complete reversal of China’s crypto policies is unlikely.

“#China to Lift Crypto Ban if #Trump Is elected? Trump and Xi are not BFFs. It will not unban. At most certain economic zones are granted special rights. For now, Hong Kong is the closest. Remember this,” he said.

His viewpoints reflect the existing complex geopolitical factors and the need for a nuanced understanding of China’s policy-making processes. As of now, investors and market analysts are closely monitoring these developments in the crypto space. The regulatory landscape remains firmly restrictive, without any indication of a policy reversal regarding cryptocurrencies.

Under current circumstances, financial institutions like the People’s Bank of China continue to enforce these regulations, while also working on its own central bank digital currency, the Digital Currency Electronic Payment (DCEP).

 

 

 

 

Source: https://news.shib.io/2024/08/29/chinese-investors-face-heavy-losses-in-crypto-investments-amid-market-downturn/

 

 

 

 

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