What to know:

By Omkar Godbole (All times ET unless indicated otherwise)

Major coins reversed early gains after Beijing stepped up trade tensions by announcing retaliatory tariffs following President Donald Trump's Wednesday decision to impose additional levies on China and other nations.

Bitcoin dropped to $83,000 from $84,600, though the downside appeared limited, probably because the market's worst fears have finally come true. Markets dislike uncertainty, and the anticipation of a looming threat often creates more anxiety and fear than the actual realization of that threat.

Since Trump took office on Jan. 20, markets have been wrestling with the threat of tariffs and a global trade war. That damped investor risk appetite, causing the BTC price to tumble from a record high over $109,000 to below $80,000 last month.

This week, Trump announced sweeping tariffs on 180 nations, with higher levies on China, the European Union and Southeast Asia. The effective U.S. tariff rate is now above the level of around 20% set by the 1930's Smoot-Hawley Tariff Act.

This so-called tariffagedon moment marks the end of lingering uncertainty and could be liberating for markets, mainly because bond yields have dropped across the advanced world in the aftermath, pricing in disinflation. That's contrary to the popular narrative that tariffs would lead to stagflation — high inflation plus low growth — forcing the Fed to keep interest rates elevated.

The yield on the benchmark U.S. 10-year bond yield has dropped below 4% for the first time since October and yields have fallen sharply in the U.K., Germany and Japan. Plus, oil has declined sharply this week on prospects of higher supply from OPEC countries.

All this bodes well for Fed rate cut bets and risk assets, including cryptocurrencies. The same can be said for Friday's March jobs report, which, if it beats estimates, will likely be seen as backward-looking, failing to account for this week's Trump tariffs, while a weak print will only add to Fed rate cuts.

With the major macro uncertainty behind us, the crypto market could return to focusing on positive developments, such as USDC issuer Circle's IPO filing and technological advancements.

On Thursday, Coinbase Derivatives submitted documentation to the CFTC to self-certify futures for XRP. In addition, Ethereum developers chose May 7 as the date for the Pectra upgrade to go live on the mainnet.

Elsewhere, the SEC acknowledged Fidelity's filing for a spot exchange-traded fund tied to SOL, which takes it closer to approval. A lot is happening within the industry, so stay alert!

Overnight Flows

Crypto:

Macro

Earnings (Estimates based on FactSet data)

No earnings scheduled.

Governance Votes & Calls

Unlocks

Token Launches

By Shaurya Malwa

📍Infected, a crypto game, moves to Solana from Base network after saying the latter couldn't handle its launch.

📍Infected claimed it faced technical issues during the start-up and Base was unable to handle high transaction volumes, leading to gas price spikes and a poor user experience.

📍It reported that a gas spike caused transaction failures during the critical first 30 minutes of the game’s debut, disrupting momentum.

📍Although front-end issues were suspected initially, the team concluded that Base’s scalability limitations were the root cause, a problem they say persists across Ethereum-based chains.

Spot BTC ETFs

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The global search interest for the term "tariffs" reached a peak value of 100 on Thursday, indicating heightened curiosity and concern about trade taxes among the general public over the past 90 days.

Peak interest among the general populace usually marks the end of a trend, meaning markets could soon be looking past tariffs.

📉 Bitcoin Falls Back to $83K as China Announces 34% Tariffs on All U.S. Goods (CoinDesk): China announced retaliatory tariffs on all goods from the U.S.

💼 March Jobs Report a 'Heads I Win, Tails You Lose' Moment for Bitcoin Bulls (CoinDesk): Bitcoin's price stability above March lows suggests seller fatigue, with implied volatility indicating a potential 3.4% price swing in the next 24 hours.

🇰🇷 South Korea’s President Yoon Ousted as Court Upholds Impeachment(Reuters): The Constitutional Court said Yoon overstepped his powers by declaring martial law. An election must be held within 60 days, with Prime Minister Han Duck-soo serving as interim president.

📊 Inflation Fears Add to Pressure on Federal Reserve (Financial Times): Markets now see short-term U.S. inflation rising at its fastest pace since 2022.

😨 Solana's SOL Could See Nearly 6% Price Swing as Whales Dump Coins Before U.S. Jobs Data (CoinDesk): Volmex's one-day implied volatility index indicates SOL may see a 6% price swing as large investors offload holdings ahead of the U.S. non-farm payroll report.

🇨🇳 China’s Response to New U.S. Tariffs Will Likely Focus More on Stimulus, Building Trade Ties (CNBC): China is likely to respond by boosting stimulus, deepening Asian and African trade ties, and keeping the yuan strong to shift inflationary pressure onto the U.S., analysts said.

CoinDesk Disclosure: The information contained in this newsletter, and any information linked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. You should seek additional information regarding the merits and risks of investing in any cryptocurrency or digital assets.

L1.co Disclosure: This material is for informational purposes only, and the content contained herein should not be considered investment advice or a solicitation, offer, or recommendation to sell or buy any asset, strategy, or product. Investing in digital assets involves a high degree of risk, including the loss of principal.

Edited by Sheldon Reback

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