QCP: Bitcoin is not safe from risk, and participants remain on the defensive until a clearer picture emerges

On April 16, the QCP released its daily market watch, saying that the U.S. demonstrated its strength and strategic brinkmanship, implementing deterrence tactics through exaggerated tariff figures. However, just as the market was bracing for the shock, the US government offered tariff exemptions and “invited” China back to the negotiating table. Why the sudden change? The bond market is starting to give warning signs. The 10-year Treasury yield surged to 4.6% and the 30-year Treasury yield topped 5%, disrupting risk sentiment. If Trump wants to drive a stock market rally during his tenure, long-term yields must fall, not rise. The sell-off in the bond market has heightened pressure on the Fed to intervene. Now it seems that a turning point is approaching. Last week, the Federal Reserve said it was ready to take action to stabilize financial conditions. Governor Waller further highlighted the shift, suggesting that the Fed’s attention is shifting to recession risks, implicitly downplaying persistent inflation, which they now describe as “transitory.” The Fed has previously applied the “transitory” label to multiple inflation cycles, but these cycles are far from transitory. Nevertheless, the Fed’s protective mechanism is gradually approaching, and the market is now pricing in 3.5 rate cuts in 2025. At the same time, gold continued to rise as geopolitical tensions mounted. With US Treasuries and the US dollar losing some of their traditional safe-haven appeal, gold is now the market’s preferred store of value. Bitcoin, unlike gold, has not gained safe-haven demand. The narrative of “alternative stores of value” has not gained traction in the current macro environment. The stance of market participants remains on the defensive side. They are still focusing on hedging downside risks until a clearer picture emerges.