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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Forkast News: Why DeFi holds the key to metaverse success

Forkast News: Why DeFi holds the key to metaverse success

A profound shift is underway in online culture, writes Anndy Lian of BigOne Exchange. Here’s how decentralized finance might one day power the NFT and metaverse economy.

Visa buying a CryptoPunk NFT for around $150,000 recently may be the first sign that these unique digital assets are starting to be taken seriously for commerce. Up until now, the sale of these “non-fungible” assets has been associated with high-priced artwork, but Visa’s purchase, while also about art, is really about promoting their expertise to businesses in the field of using NFTs for commerce. Indeed, in a report, coinciding with the CryptoPunk purchase, Visa states a longer-term vision: “While the prices of individual NFTs fluctuate, fascinating use cases for NFTs are still emerging and the groundwork is being laid for the long-term utility of NFTs.”

One such use case led by big consumer brands from Facebook to Coca Cola is the use of NFTs in the virtual world, called the metaverse. Indeed, if you heard the news that Facebook is about to launch its own crypto wallet Novi (which is — in true metaverse fashion — interoperable with other wallets) then you may also recall it’s also due to work with NFTs as well as stablecoins.

What you may not know is that Facebook’s CEO Mark Zuckerberg sees the future of the global social network in the metaverse. Indeed, Zuckerberg recently said that within five years Facebook would be a “metaverse company,” while Satya Nadella, Microsoft’s CEO, said they were investing in the “enterprise metaverse.” Simply put, whoever can integrate NFTs and payment with the metaverse may well lead the biggest change in online culture and economy since the birth of the web in the 1990s. This view is also supported by David Raszucki, head of the US$50 billion Roblox Corporation, who sees the emergence of the metaverse as profound a shift as the invention of the internet and the World Wide Web.

Certainly, it’s along those lines in terms of potential of the wider metaverse, coupled with the key role of NFTs that software developer Alethea AI, which claims to have created the world’s first “intelligent NFT,” recently raised US$16 million in funding to create a metaverse populated by its bots. The NFTs that will fill the metaverse will be talking, intelligent NFTs (iNFTs) created by Alethea: machine-learning bots that can have human-like conversations.

“Alethea’s thesis is that NFTs will provide a definitive property rights infrastructure for the emerging Metaverse driven by interactive and intelligent Avatars,” according to the company. “The AI infrastructure built by Alethea will serve as the underlying connective tissue to enable NFTs to ‘come alive’ as interactive media assets, with personality traits, preferences and real-time interactive capability.”

In a recent interview in The Verge, Zuckerberg laid out his vision of a metaverse bringing “enormous opportunity to individual creators and artists; to individuals who want to work and own homes far from today’s urban centers; and to people who live in places where opportunities for education or recreation are more limited. You can think about the metaverse as an embodied internet, where instead of just viewing content — you are in it.”

Of course, anyone who’s watched The Social Network, or has seen how Facebook can do harm through manipulating its online users’ behavior, is certainly going to wonder if the metaverse is going to be in safe hands with Facebook. As Tim Sweeney, CEO of Fortnite maker Epic Games famously once remarked: “This metaverse is going to be far more pervasive and powerful than anything else. If one central company gains control of this, they will become more powerful than any government, and be a god on Earth.”

Supporters of a thoroughly decentralized metaverse, where NFTs play a pivotal role in facilitating the DeFi (decentralized finance) necessary for this meta-project to come into being, gathered recently at the Paris-based ETH event EthCC. Key speaker Ben Lakoff , co-founder of NFT-protocol Charged Particles, led discussion of the need for permissionless, trustless financial services with a high transaction rate for a metaverse to function optimally. The metaverse would also necessitate a large amount of data to be stored and unaltered, where blockchain technology comes into play.

Lakoff underlined this point to the audience, connecting DeFi and identity in his presentation: “NFTs as identity, as a DeFi passport, this on-chain credit scoring — all of these things kind of mixed together. We can start to see how these things play together in a very, very unique way that paved the way for Web 3.0.” Lakoff became particularly passionate when talking about NFTs as financial products able to hold other tokens. “You have your NFT that acts as a basket, owning all of these different types of assets,” he explained, adding that baskets could contain social tokens and interest-bearing assets, as well as enabling easy transfer to another individual’s portfolio.

Certainly, there are many aspects of the metaverse to be figured out before the vision becomes a reality. Matthew Ball, a venture capitalist who wrote a key article about the metaverse in early 2020, also makes this point. A lot of the pieces of the jigsaw must come together before the metaverse can take shape, with Epic Games’ popular “Fortnite” game possibly the nearest to that future available right now, says Ball.

Putting aside the technological challenges of an “always on” environment capable of supporting thousands if not millions of people online in the same virtual space at the same time, what is certain is that a DeFi financial architecture involving NFTs is likely to be key to its success, what you might call the “MetaverseFi.”

Looking at the current cryptocurrency landscape for clues on what form these decentralized products and services might take in the metaverse it’s worth returning to the real world. Take the accelerating mainstream adoption of cryptocurrencies, and greater financial institutional involvement. From the legalization of Bitcoin in El Salvador, the implementation of crypto payments in PayPal, to the reformation of the Dogecoin Foundation to push its crypto payment potential, the trend is clear. At the same time, as we’ve seen over in the U.S. with the Infrastructure Bill inclusion of provisions on crypto, and the European Commission’s proposed Regulation on Markets in Crypto Assets (MiCA), there’s a parallel push for greater regulation from the government.

Clearly, any key players in creating the metaverse which includes large corporations like Facebook and Epic Games are going to have to be compliant with these emerging DeFi crypto regulations when creating its decentralized payment systems.

In an in-depth look at the prospects for a metaverse, U.K.-based blockchain VC company Outlier Venture has found the the need to have a crypto-decentralized core is paramount: “It needs its own economy and currencies native to it, where value can be earnt, spent, lent, borrowed or invested interchangeably in both a physical or virtual sense and most importantly without the need for a government.”

However, while the metaverse may reside in the virtual world, I believe its use of NFTs and DeFi to bring it to life are firmly rooted in the real world. The dream of an open metaverse is a motivating vision that engages individuals and attracts corporations, but if it’s going to include people from all around the world from Beijing to Boston, it’s also going to have to contend with the impact that increased government scrutiny and regulation will have on DeFi.

 

AUTHOR PROFILE: ANNDY LIAN

Anndy Lian is chairman of BigOne Exchange, a trading platform registered in the Netherlands. Anndy is a business strategist with over 15 years of experience in Asia, and he has worked in various industries for local, international and publicly traded companies. Anndy is also currently the chief digital advisor at the Mongolian Productivity Organisation.

 

Original Source: https://forkast.news/why-defi-holds-key-to-metaverse-success/

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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