The numbers tell a story of retreat: major US equity indices took a beating on Thursday, with the S&P 500 sliding 1.5 per cent and the Nasdaq plunging 2.8 per cent. Nvidia, a darling of the tech world, stumbled 8.4 per cent despite exceeding earnings expectations—a sign that even stellar results can’t always appease jittery investors.
Meanwhile, the bond market stirred, with the 10-year Treasury yield ticking up 3 basis points to 4.28 per cent and the 2-year yield edging to 4.07 per cent. The US Dollar Index surged 0.8 per cent, its biggest one-day leap in two months, fuelled by tariff headlines that have markets on edge as the March 4 deadline looms for Canada and Mexico, alongside whispers of a 10 per cent hike for China.
Gold, often a safe haven, didn’t escape the pressure, dropping 1.1 per cent to its lowest in over two weeks, while Brent crude bucked the trend, climbing 2.1 per cent amid supply worries tied to Trump’s revocation of a US oil major’s license in Venezuela. Across the Pacific, the MSCI Asia ex-Japan index fell 0.88 per cent, poised for its first weekly loss in seven weeks, with Asian equities mostly lower in early Friday trading.
The cryptocurrency space mirrored this gloom. Bitcoin cratered below US$80,000 on February 28, hitting US$79,666—its weakest since November 11, 2024—shedding over 5 per cent in a single day and 25 per cent since its mid-December peak above US$105,000. Ethereum fared even worse, tumbling to a 14-month low of US$2,150, down 20 per cent in a week, hammered by risk aversion and institutional selling.
BlackRock, the world’s largest asset manager, offloaded 30,280 ETH across four transactions to Coinbase Prime, while its iShares Ethereum Trust dumped US$70 million worth of ETH. Other heavyweights like Fidelity, Grayscale, and Bitwise pulled US$24.5 million from their Ethereum accounts, amplifying the sell-off. The Crypto Fear and Greed Index plunged to 10, signalling “extreme fear” not seen since 2022’s market crash.
Yet, amid this chaos, Ethereum’s derivatives market offers a glimmer of resilience: 30-day ETH futures trade at a 7 per cent premium over spot prices, up from 6 per cent two days ago, and options skew at -2 per cent suggests whales aren’t panicking—echoing a recovery pattern from a 38 per cent drop on February 3.
My take: Navigating the storm
This week feels like a wake-up call—a reminder that markets, for all their sophistication, are still tethered to human sentiment and political whims. Let’s unpack it. The retreat in global risk sentiment isn’t a bolt from the blue; it’s been brewing in a cauldron of events that sparked profit-taking. Consumer confidence dipped below expectations on Tuesday, a red flag for an economy that thrives on spending.
Then came Nvidia’s earnings—objectively strong, yet not dazzling enough to halt the sell-off in the AI complex. Investors seem to be recalibrating, perhaps realising that the semiconductor boom (phase 1 of the AI story) might be giving way to infrastructure hyperscalers (phase 2) and software applications (phase 3). Add to that a softening labor market—possibly a ripple from the Trump administration’s Department of Government Efficiency culling—and the stage was set for Thursday’s tumble.
The tariff saga is the elephant in the room. With Trump pushing ahead on Canada, Mexico, and China, markets are grappling with uncertainty. Tariffs could jolt supply chains, inflate costs, and squeeze corporate margins—hardly a recipe for bullishness.
The US Dollar’s jump reflects this tension, pressuring risk assets like equities and crypto. Gold’s decline surprises me less; it’s a crowded trade, and profit-taking was overdue. Brent crude’s rise, though, underscores how geopolitical moves—like Trump’s Venezuela decision—can override broader risk-off vibes in specific sectors.
Crypto’s woes deserve a closer look. Bitcoin’s drop below US$80,000 feels like a gut punch to the bulls who saw it as a Trump-era golden child. Hopes of US support for digital currencies are fading, overshadowed by tariff uncertainties and a US$1.5 billion Ether hack that’s spooked the market.
Ethereum’s plunge to US$2,150 is uglier still, driven by institutional exits that signal distribution, not just panic. BlackRock’s moves are telling—when the biggest player starts unloading, others follow. Yet, the derivatives data intrigues me. That 7 per cent futures premium and neutral options skew suggest a core of confidence among big players, hinting at a potential floor. History backs this up: Ethereum’s 38 per cent drop on February 3 was a prelude to a swift rebound. Could we see that again? It’s possible, but not guaranteed.
So, where does this leave us? I see a few paths forward. First, fixed income is shining as a stabiliser. With the 10-year yield at 4.28 per cent, bonds are outpacing the S&P 500 year-to-date—a rare feat that underscores their role in turbulent times. I’ve long felt US stocks were pricey; the S&P 500’s consolidation feels healthy, a chance to buy the dip if you’re nimble.
The Mag7’s 9 per cent year-to-date loss stings, but the Other 493 stocks holding a 3 per cent gain show resilience outside the tech bubble. Timing matters—today’s PCE inflation data could tip the scales. A hotter-than-expected read might fuel more selling as February closes, so brace for volatility.
China’s an outlier worth watching. The February 17 Symposium, chaired by President Xi, has sparked optimism about private enterprise, driving a sharp rally. But technicals scream overheating—RSI and MACD indicators are flashing red. I’d approach this via derivatives—options or futures—to cushion downside risk. The move’s been too fast to dive in blind.
On the AI front, I’m not writing it off. The Nvidia slump doesn’t kill the story; it shifts it. Semiconductors are cooling, but infrastructure (think cloud giants) and software (AI apps) are heating up. Rotation, not collapse, is my read. Crypto’s trickier—Bitcoin and Ethereum are battered, but the derivatives hint at a bottoming process. I wouldn’t bet the farm yet; “extreme fear” can linger. Still, if you’re a contrarian, nibbling at these levels could pay off if March brings clarity on tariffs and policy.
The Bigger Picture
Zooming out, this week encapsulates 2025’s volatility. Trump’s tariff plans, economic softening, and sector rotations are rewriting the playbook. Investors face a choice: hunker down in bonds and wait, chase China’s momentum with caution, or hunt for bargains in beaten-down tech and crypto.
I lean toward a balanced approach—some fixed income for safety, selective equity dips (O493 over Mag7 for now), and a watchful eye on crypto derivatives for signs of life. The PCE data today could be a pivot point; a benign number might steady nerves, while a spike could deepen the rut.
Either way, this isn’t a crisis—it’s a correction with opportunities for those who can stomach the ride.
Source: https://e27.co/market-wrap-a-week-of-retreat-and-reflection-20250228/
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”.
