June 18th, 2025

Crypto feels geopolitical heat, Wall Street dips: What else to expect?

We are currently navigating a precarious landscape as escalating tensions in the Middle East, particularly between Israel and Iran, stoke fears of a broader regional conflict that could draw in the United States. This geopolitical uncertainty has triggered a notable retreat in global risk sentiment, with investors increasingly wary of the potential for direct US military involvement.

On Tuesday, this apprehension was palpable in the performance of US stock markets, which closed lower across the board. The Dow Jones Industrial Average fell by 0.7 per cent, the S&P 500 declined by 0.8 per cent, and the Nasdaq Composite dropped by 0.9 per cent. These declines underscore the market’s sensitivity to geopolitical risks, especially those that could disrupt global economic stability.

Asia’s markets and central banks on alert

Meanwhile, in Asia, equity indices mainly opened lower on Wednesday, suggesting that the risk-off sentiment is permeating global markets. The US equity index futures indicated a potential rebound, with expectations of a higher open for US stocks. This mixed picture highlights the market’s ongoing struggle to assess the full impact of the unfolding events in the Middle East.

Adding to the complexity, central banks in Asia are grappling with their own set of challenges, as geopolitical tensions intersect with inflationary pressures and concerns about economic growth. On Tuesday, the Bank of Japan (BoJ) maintained its benchmark short-term interest rates at 0.5 per cent, a decision reached unanimously and widely anticipated by market analysts.

The BoJ Governor Kazuo Ueda issued a cautionary note, warning that a sustained rise in energy and oil prices—exacerbated by the Middle East conflict—could drive underlying inflation higher, potentially necessitating further monetary policy action. This statement highlights the delicate balance that central banks must strike in responding to external shocks while maintaining domestic economic stability. Looking ahead, attention in Asia shifts to Bank Indonesia’s (BI) rate decision on Wednesday.

While most analysts surveyed by Bloomberg expect the Bank of Indonesia (BI) to hold rates steady, a significant minority anticipates a 25-basis-point cut. This divergence in expectations reflects the uncertainty surrounding Indonesia’s monetary policy trajectory, particularly as the country navigates the dual pressures of global geopolitical risks and domestic economic needs.

Bonds, dollar, and oil reflect flight to safety and inflation worries

In the bond market, a flight to safety was evident as investors sought refuge in US Treasury securities. The yield on the two-year Treasury note eased by one basis point to 3.95 per cent, while the 10-year yield fell more substantially by five basis points to 4.39 per cent. This movement suggests that investors are favouring longer-term bonds, likely as a hedge against the geopolitical uncertainty and the potential for slower economic growth.

The decline in yields also points to a broader market expectation that central banks, including the Federal Reserve, may need to adopt a more accommodative stance if the situation in the Middle East escalates further. Meanwhile, the US Dollar Index (DXY) staged a robust recovery, climbing 0.8 points from 98.00 to 98.80.

The dollar’s strength in this context is emblematic of its role as a safe-haven currency during periods of heightened global risk. Investors are likely seeking the relative stability and liquidity of the dollar as they brace for potential market disruptions stemming from the Middle East conflict.

Commodities, too, have been caught in the crosscurrents of geopolitical risk. Gold, traditionally viewed as a safe-haven asset, experienced a slight softening, dipping below US$3,400 per ounce to close at US$3,390. This modest decline is somewhat counterintuitive, given the rising geopolitical tensions, and may indicate that investors are not yet fully committed to gold as a hedge, possibly due to the simultaneous strength of the US dollar or other market dynamics.

In stark contrast, Brent crude oil prices surged by four per cent to US$76.40 per barrel, driven by fears that the conflict in the Middle East could disrupt oil supplies from the region, which accounts for a significant portion of global production. The spike in oil prices carries inflationary implications, as higher energy costs can ripple through the global economy, affecting everything from consumer prices to corporate profit margins. This development further complicates the task for central banks, which must now contend with the dual threats of geopolitical instability and rising inflation.

Crypto cools as tensions heat up

The cryptocurrency market has not been immune to these developments. Bitcoin, the leading digital asset, initiated a fresh decline, falling below the US$106,800 zone before stabilising around US$106,200. Technical analysis reveals a short-term triangle formation with support at US$104,200 on the hourly chart of the BTC/USD pair. Bitcoin is currently trading below both the $106,800 level and its 100-hour simple moving average, suggesting that it faces significant resistance.

However, if it manages to hold above the US$103,500 zone, there is potential for a renewed upward movement. Ethereum, the second-largest cryptocurrency, also relinquished its gains from Monday’s rally, briefly dipping below US$2,500 before recovering some ground overnight. These price movements reflect the broader risk-off sentiment permeating global markets, as investors reduce their exposure to more speculative assets, such as cryptocurrencies, in favour of traditional safe havens.

Geopolitical risks have been further amplified by statements from former US President Donald Trump, who, in a series of posts on Truth Social, claimed that the US has “complete and total control” over Iran’s skies and called for Iran’s “unconditional surrender.” While these statements do not reflect official US policy, they contribute to the uncertainty surrounding potential US involvement in the conflict.

The prospect of direct US military engagement in the Middle East is a significant concern for investors, as it could lead to a substantial escalation of hostilities, with far-reaching consequences for global markets. The situation is fluid, and any miscalculation by the involved parties could trigger a rapid deterioration in market sentiment.

Massive liquidations reflect market jitters

In the cryptocurrency space, the market’s reaction to these geopolitical developments has been swift and severe. Over the past 24 hours, more than US$330 million in positions were liquidated, with bullish long bets accounting for nearly US$268 million of that total. This wave of liquidations underscores the heightened volatility in the crypto market, as traders adjust their positions in response to shifting risk dynamics.

It is also worth noting that approximately US$650 million in Bitcoin short positions are at risk of liquidation if the cryptocurrency rebounds to US$107,000. This suggests that while the market has been under pressure, there remains potential for a sharp reversal if sentiment improves.

Additionally, Bitcoin’s Open Interest—a measure of the total number of outstanding derivative contracts—fell by 1.97 per cent in the last 24 hours, indicating that some traders are closing their positions amid the uncertainty. Despite this, more than 55 per cent of Binance’s top traders with open Bitcoin positions are positioned long, according to the long/short ratio. This suggests that a segment of the market remains cautiously optimistic about Bitcoin’s prospects, even in the face of geopolitical headwinds.

Market sentiment, as gauged by the Crypto Fear & Greed Index, has shifted from “Greed” to “Neutral,” reflecting a more cautious stance among cryptocurrency investors. This change aligns with the broader retreat in risk appetite observed across global markets. The index, which aggregates various indicators to assess market psychology, serves as a barometer for investor sentiment. Its move to “Neutral” suggests that the market is in a state of flux, with participants weighing the potential for further downside against the possibility of a recovery.

A personal take on market fragility

From my perspective, the current situation is a stark reminder of how fragile global markets can be. The escalating tensions in the Middle East are not just a regional issue—they have the potential to impact global economic landscapes significantly. The surge in oil prices, for instance, is a double-edged sword: it could fuel inflation, prompting tighter monetary policies, but it could also strain economies already grappling with post-pandemic recovery.

The mixed signals from gold and cryptocurrencies fascinate me—gold’s slight dip despite rising tensions suggests that investors might be prioritising liquidity over traditional hedges, while Bitcoin’s resilience amid liquidations hints at a stubborn bullish undercurrent. I find the central banks’ predicament particularly compelling; the BoJ’s warning about oil-driven inflation and Bank Indonesia’s uncertain path illustrate the tightrope policymakers must walk.

Personally, I think the markets are in a wait-and-see mode—everyone is holding their breath, hoping for de-escalation, but preparing for the worst. It’s a nerve-wracking time, and I can’t help but wonder how long this uncertainty can persist before we see a decisive shift, one way or another.

Conclusion: Balancing risk and caution

In conclusion, the escalating tensions in the Middle East are casting a long shadow over global markets, with the potential for direct US involvement adding a layer of complexity to an already volatile situation. Investors are responding by seeking safety in traditional havens, such as US Treasuries and the dollar, while commodities like oil are surging due to fears of supply disruptions.

The cryptocurrency market, often seen as a barometer of risk sentiment, has also been impacted, with Bitcoin and Ethereum experiencing declines but showing signs of resilience. Central banks, particularly in Asia, are facing a delicate balancing act as they navigate the interplay between geopolitical risks, inflationary pressures, and economic growth.

As the situation in the Middle East continues to evolve, markets are likely to remain on edge, with investors closely monitoring developments for any signs of escalation or de-escalation. In this environment, a diversified portfolio that includes both risk assets and safe havens may be the most prudent approach for navigating the uncertainty ahead. The coming days will be critical.

Source: https://e27.co/crypto-feels-geopolitical-heat-wall-street-dips-what-else-to-expect-20250618/

Anndy Lian

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”.

www.anndy.com

j j j

March 13th, 2025

Global markets in flux: Tariffs stir the pot, CPI cools the heat

Key points:

U.S. 25% tariffs on steel and aluminum, effective March 12, 2025, sparked EU and Canadian retaliation, escalating trade tensions. This tit-for-tat war injects uncertainty into fragile global risk sentiment, reminiscent of a high-stakes chess game shifting power with each move.
U.S. February CPI rose 0.2% month-on-month, 3.1% year-on-year, below expected 0.3% and 3.2%, easing stagflation fears. S&P 500 gained 0.5%, Nasdaq 1.2%, and VIX fell to 24.23, as softer inflation lifted risk sentiment despite tariff-driven cost concerns.
The 10-year U.S. Treasury yield rose 3.3 basis points to 4.312%, 2-year up 4.3 to 3.987%, narrowing the spread to 32.6 basis points. This shift hints at growth worries, but also a Fed pause on rate cuts, guided by data.
Europe’s DAX surged 1.6% despite tariff fears, while ECB’s Lagarde warned of inflationary shocks. Canada cut rates to 2.75%, bracing for a “new crisis” as U.S. tariffs threaten its export-heavy economy, showing resilience and vulnerability in equal measure.
Bitcoin rose 1.8% to $83,511.6, but recession and trade war fears linger. Ethereum’s ETH/BTC fell 1.5% to 0.022, RSI at 23.32, signaling a persistent downtrend. Crypto reflects broader risk asset struggles amid global uncertainty.
Tariffs could spike steel prices 10-20%, raising costs, offset by softer CPI and Fed stability. Gold up 0.6%, Brent crude 2%, yet global risk sentiment teeters between trade war risks and hope for stabilization as central banks adapt.

The situation today feels like a high-stakes chess game, with each move—whether it’s a tariff imposition or a central bank decision—shifting the balance of power and sentiment. The escalation of trade tensions, sparked by the US’s imposition of 25 per cent tariffs on all steel and aluminium imports effective March 12, 2025, has sent shockwaves through global risk sentiment, and it’s a story worth unpacking in detail.

Let me offer my perspective on what’s happening, grounded in the facts and data at hand, and explore what this means for markets, economies, and even the average person watching from the sidelines.

The US tariffs, which hit the ground running yesterday, mark a bold escalation in President Donald Trump’s trade agenda. This isn’t a new playbook—during his first term, Trump levied similar duties on steel and aluminium in 2018, only to later exempt Canada and Mexico in 2019 after negotiations.

This time, though, the scope feels broader and the rhetoric sharper. The immediate retaliation from the European Union, with plans for tariffs on €26 billion (US$28.3 billion) of American goods, and Canada’s counterpunch of US$21 billion in tariffs on US exports, signal that trading partners aren’t backing down.

This tit-for-tat dynamic is classic trade war territory, and it’s injecting a heavy dose of uncertainty into an already fragile global risk sentiment. From my vantage point, it’s clear that markets are wrestling with two competing forces: the fear of economic disruption and the hope that cooler heads—or at least softer data—might prevail.

Take the US February CPI data released yesterday, for instance. It came in at +0.2 per cent month-on-month and 3.1 per cent year-on-year, undercutting expectations of 0.3 per cent and 3.2 per cent, respectively. The softer print, driven largely by weaker services inflation, was a sigh of relief for investors who’ve been jittery about stagflation—a toxic mix of stagnant growth and rising prices.

In a world where Trump’s tariffs could easily stoke inflation by driving up the cost of imported goods, this data offered a counter-narrative: maybe price pressures aren’t as relentless as feared. The market reaction was telling. The S&P 500 climbed 0.5 per cent, buoyed by mega-cap tech stocks that have become the darlings of this volatile era, while the Nasdaq jumped 1.2 per cent.

The VIX, often dubbed Wall Street’s “fear index,” slid to 24.23 from 26.92, marking its second day of easing. It’s not a full-on celebration—24.23 is still elevated compared to calmer times—but it’s a sign that the CPI data gave risk sentiment a much-needed lift.

Yet, beneath the surface, the bond market told a slightly different story. The 10-year US Treasury yield ticked up 3.3 basis points to 4.312 per cent, while the 2-year yield rose more sharply by 4.3 basis points to 3.987 per cent. This narrowed the yield spread between the two to 32.6 basis points, a subtle shift that hints at shifting expectations about growth and inflation.

Typically, a narrower spread can signal concerns about economic slowdown, but in this case, it might also reflect a market pricing in the Fed’s likely pause on rate cuts. The softer CPI didn’t dismantle the narrative of a patient Federal Reserve, which has been signaling it’s in no rush to ease policy further unless growth takes a serious hit. For now, the Fed seems content to let the data guide its hand, and investors are hanging on every number.

Across the Atlantic, Europe’s response to the tariff saga has been a mix of resilience and defiance. The DAX surged 1.6 per cent, leading a broader recovery in European indices that had been battered by tariff fears earlier this week. It’s a fascinating contrast: while the EU is gearing up to hit back at the US, its markets are finding some footing, perhaps buoyed by the US inflation reprieve and a sense that trade fragmentation, while disruptive, isn’t an immediate death knell.

ECB President Christine Lagarde’s comments yesterday added another layer to this narrative. She warned that large shocks—like these tariffs—could amplify inflationary risks and lead to “more disruptive relative price changes.” It’s a sober reminder that Europe isn’t just a bystander in this trade war; it’s a player with its own vulnerabilities, especially given its export-driven economies like Germany.

Meanwhile, in Canada, the Bank of Canada (BoC) made its move, trimming its key policy rate by 25 basis points to 2.75 per cent, right on cue with market expectations. But the tone from the BoC was anything but routine. Governor Tiff Macklem didn’t mince words, cautioning about “a new crisis” as the central bank braces for the fallout from US tariffs. Canada, which sends about 75 per cent of its exports to the US, is uniquely exposed here.

Steel and aluminium tariffs could hammer its industrial sector, and the ripple effects—think weaker growth, a softer loonie, and higher import costs—could test the BoC’s resolve. From my perspective, this rate cut feels like a preemptive strike, a way to cushion the economy against what’s coming. But Macklem’s crisis talk suggests the bank knows it might need to do more if the trade war digs in.

Then there’s the crypto angle, which adds a wild card to this already complex picture. Bitcoin climbed 1.8 per cent to US$83,511.6 early today, catching a tailwind from Wall Street’s overnight rebound. It’s a modest recovery from its weakest levels this year, but the bigger story is what’s holding it back: recession fears and trade war jitters. Trump’s tariffs, now in effect, and his promise of reciprocal duties by April 2—potentially targeting Europe with even higher rates—keep markets on edge.

The idea that these policies could choke global trade, juice US inflation, and tip the economy into recession isn’t just theoretical; it’s a scenario traders are pricing in. Trump and his team have brushed off these concerns, framing any turbulence as a necessary growing pain for their agenda. But their flip-flopping—like granting Canada and Mexico a temporary reprieve on some tariffs—only fuels the uncertainty.

Ethereum’s story is even bleaker. The ETH/BTC pair, which measures Ether’s strength against Bitcoin, slumped over 1.5 per cent to 0.022, its lowest since May 2020. That’s part of a brutal multi-year slide—down more than 85 per cent from its 2017 peak of 0.156. The two-week ETH/BTC chart shows the relative strength index (RSI) at a record low of 23.32, deep in oversold territory.

Normally, an RSI below 30 hints at a potential bounce, but Ether’s relentless decline suggests the downtrend has legs. As a journalist, I see this as a microcosm of broader market dynamics: risk assets, even speculative ones like crypto, are struggling to find solid ground amid all this noise.

Stepping back, what strikes me most is the interplay between fear and hope in these markets. The US tariffs are a tangible threat—steel and aluminium prices could spike 10-20 per cent based on 2018 precedent, jacking up costs for everything from cars to construction. Jobs might tick up in those sectors, but downstream industries could bleed positions as costs rise.

Canada’s retaliation, targeting US$21 billion in US goods, and the EU’s US$28.3 billion counterstrike, amplify the stakes. Yet, the softer US CPI and the Fed’s steady hand offer a counterweight, a glimmer that maybe this won’t spiral into chaos. Gold’s 0.6 per cent uptick reflects safe-haven buying, but Brent crude’s 2 per cent jump on gasoline demand shows there’s still some economic pulse out there.

We’re in a precarious moment. Global risk sentiment is fragile because it’s caught between real economic risks and the faint hope of stabilisation. Trump’s tariffs could be a negotiating tactic—he’s hinted at flexibility before—but if they stick, the damage could be profound. Central banks like the BoC and ECB are on high alert, ready to adapt, but their tools might not be enough if trade fragmentation deepens. For investors, it’s a tightrope walk: chase the rallies in tech or hunker down with gold and bonds.