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Interest Rate Fears Replace Tariff Fears as Crypto Pulls Back
The latest in a series of reversed tariff threats by President Trump isn’t having the hoped-for effect on risk markets at least halfway through the U.S. trading day on Thursday.
The stock market initially bounced off a sharply lower opening and bitcoin (BTC) rose through $91,000 as Commerce Secretary Howard Lutnick — in an appearance on CNBC — said the president would exempt Mexico from his new 25% tariff for any goods or services covered under a previous trade agreement. The nicer stance toward the country’s neighbor to the south was confirmed later by a social media post from Trump.
The positive moves in markets were short-lived though, with the Nasdaq at its session low just past the noon hour on the east cost, down 2.3%. Bitcoin has pulled back to $88,500, down nearly 1% over the past 24 hours.
This just in: Stagflation
Possibly lost in the unending ebb and flow of news emanating out of D.C. is a sharp rise in interest rates across the developed world.
With U.S. military support for Europe possibly on the decline, governments across the continent are pledging budget-busting increases in defense spending. Germany, for instance, this week saw one of its worst bond crashes ever, with the 10-year Bund yield jumping more than 40 basis points to the current 2.83%.
In Japan, where long-term Japanese Government Bond (JGB) yields were little more than a handful basis points for what seemed like decades, the 10-year JGB yield rose another 6 basis points to 1.51% overnight. That’s more than double the level of six months ago.
The moves haven’t been ignored by U.S. markets. The 10-year Treasury yield — which had previously had declined about 70 basis points since the Trump inauguration — has risen more than 20 basis points in the last 48 hours to 4.30%.
«The recent move in global bond yields has put me on high alert,» wrote Lekker Capital’s Quinn Thompson. Particularly concerning to Thompson is that yields are rising as growth slows.
«We are witnessing the exact definition of stagflation which historically has not treated risk assets well,» he continued.
Friday brings the latest U.S. jobs figures
The large gains in interest rates brings a renewed importance to the February U.S. Nonfarm Payrolls Report to be released Friday morning.
Economists are expecting payrolls to have risen 160,000 versus 143,000 in January. The unemployment rate is seen remaining steady at 4%. A strong print — and employment reports have tended to run ahead of expectations for many months running — could send rates pumping even higher, and risk markets, crypto among them, into a new leg down.
Shares of Nasdaq-listed cryptocurrency exchange Coinbase (COIN) rose 43% this month, making the firm the top performer in the S&P 500 since it joined the index at the end of last month.
June’s run is already the stock’s best since November and caps three straight monthly gains. Coinbase’s shares reached their highest level since their public debut.
COIN hit a $382 high this week before enduring a slight correction, ending the week at $353 and seeing a slight 0.7% drop in after-hours trading to $351.
The wider S&P 500 index rose roughly 5% in June as geopolitical tensions eased.
Washington’s progress on the GENIUS Act, Congress’s first rulebook for dollar-pegged stablecoins, helped shift investor focus from trading fees to stablecoin revenue.
The bill brightened the outlook for Circle, whose shares hit a record high and saw its market cap near that of Coinbase this week.
Coinbase keeps all yield on USDC balances held on its platform and nearly half of other USDC income, equal to about 99 percent of Circle’s revenue, giving shareholders indirect exposure at no added cost, CNBC reported Friday, citing analysts including Citizens’ head of financial technology research Devin Ryan.
Trading, however, remains subdued. Average daily volume on Coinbase has drifted lower since April.
Robinhood (HOOD) has introduced micro futures on bitcoin (BTC), solana (SOL) and XRP in the United States., expanding its existing crypto futures offering for its nearly 26 million funded accounts.
Micro contracts need far less collateral than full-size futures, letting traders take directional positions while committing a smaller slice of capital.
The contracts offer traders more flexibility to bet on a cryptocurrency’s future price direction or hedge current positions given their smaller size.
The launch rounds out a futures suite that began with BTC and ETH in January. It also comes weeks after the firm closed its $200 million purchase of Bitstamp and finalized a $179 million deal for Canada’s WonderFi.
Robinhood’s data shows that crypto notional volumes have exploded upward over time, reaching $11.7 billion in May. The figure marks a 36% rise month-over-month, and a 65% growth year-over-year.
XRP climbed 5.5% to $2.19 in the last 24 hours after a trio of catalysts converged to help the cryptocurrency outperform the wider cryptocurrency market.
One of the catalysts was launch of XRP micro futures on Robinhood. The contracts offer traders more flexibility to bet on the cryptocurrency’s future price direction or hedge current positions given their smaller size.
Regulatory fog also thinned. On Friday, Ripple withdrew its cross-appeal in its long-running U.S. Securities and Exchange Commission (SEC) lawsuit. The SEC sued Ripple back in 2020 over its XRP sales, alleging these violated securities laws. The SEC is expected to drop its own appeal, leaving last year’s ruling, ordering Ripple to pay a $125 million civil penalty to the SEC, intact. The move could lift a lid that had kept some investors on the sidelines.
On-chain data rounded out the bullish setup. The XRP Ledger logged over a 1.1 million active addresses over the past week according to crypto analyst Ali Martinez, who cited Glassnode data.
XRP’s rise saw it outperform the wider crypto market, with the broader CoinDesk 20 (CD20) index rising 1.7% in the last 24 hours.
Coinbase Outpaces S&P 500 With 43% June Rise as Stablecoin Narrative Grows: CNBC
Robinhood Launches Micro Bitcoin, Solana and XRP Futures Contracts
Why is XRP Up Today? Trio of Catalysts Sees Token Outperform Wider Crypto Market
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