Bitcoin Shrugs Off $450M Sell-Off as Trump Tariffs Rattle Global Markets
Digital Asset Market: Bitcoin's price remained stable, returning to $119,000 despite news that Galaxy Digital moved another 3,782 BTC, most of it to exchanges, representing a potential $450 million sell-off. Unlike last week, when an 80,000 BTC transfer triggered a dip to $114,500, this recent movement failed to sway the market. A brief dip toward $117,000 during the US trading hours the day before failed to spark a sustained downturn, with bulls retargeting a key resistance zone. Since this morning, the market has been trending down at around $117,500, which is likely the result of Galaxy Digital liquidating the mentioned assets. Some traders warn of potential further dips, with downside targets as low as $108,000, but the market overall appears resilient in the face of large transfers and growing volatility.
Macro Economics: More and more analysts are taking a bullish stance on the U.S. economy, suggesting that instead of a modest recovery, a full-scale boom could be imminent, driven by political incentives for pro-growth policies, massive domestic manufacturing bills, significant global stimulus measures, expanding capital expenditures from tech giants, and improving signals from their proprietary Regime Indicator. Despite prevailing market fears of stagflation, these analysts expect a true boom and feel that if the economic outlook shifts from downturn to recovery, a rapid rally in value stocks could follow. However, while global and domestic stimulus and investment plans are substantial, questions remain about how quickly these promised investments will materialize to support the predicted boom, as many are long-term projects, and some face funding obstacles.
Meanwhile, Commerce Secretary Howard Lutnick confirmed that President Trump’s new tariffs on many U.S. trading partners will begin as scheduled this Friday, with no further delays expected. While trade talks with China are ongoing separately in Stockholm, Trump is set to impose “reciprocal” tariffs on dozens of countries starting August 1, mainly sticking to rate levels first proposed in April. Notably, the tariffs include a steep 50% blanket tax on Brazilian imports. Lutnick emphasized that Trump has rejected partial deals in favor of demanding fully open markets for American exports, and while offers are on the table, the administration is ready to enforce the new rates and continue negotiations after implementation.
Equities: US equity futures are rising, positioning the S&P 500 for a potential seventh record high as investors focus on a busy day of earnings and key economic data, with tech stocks and the Nasdaq leading gains. Bond yields are slipping and the dollar is rallying on expectations of minimal trade-related economic damage, while companies like Amkor and Cadence surge on strong forecasts, and Chart Industries jumps on M&A speculation. In contrast, Whirlpool and UnitedHealth are falling after cutting guidance. Markets are looking past recent US tariff deals toward upcoming indicators such as JOLTS, housing data, and consumer confidence, anticipating the Fed will keep rates unchanged and watching for signals on future policy. In Europe, stocks are higher, boosted by companies like Philips, as US-China trade talks unfold in Sweden and the Treasury prepares for more debt sales. Meanwhile, analysts note stretched equity positioning ahead of major earnings from firms like Visa and UnitedHealth, contributing to heightened market anticipation amid a packed week of corporate and economic developments.
The Fed and US Treasury: There is wide speculation that President Donald Trump will replace Jerome Powell as Fed Chair when his term ends in May 2026, with Treasury Secretary Scott Bessent, former Fed Governor Kevin Warsh, and National Economic Council director Kevin Hassett seen as the top contenders in a virtual tie. Many on Wall Street feel that Trump’s criticism has already compromised the Fed's independence and is contributing to higher long-term interest rates and a weaker dollar. While recession risks are perceived to be easing and some uncertainty over tariffs and policy has subsided, concerns linger about a slowing labor market and possible overvaluation in the stock market. Unemployment is expected to rise slightly from the current rate of 4.1% to 4.4% in 2026, whereas the probability of recession has dropped from 38% in June to 31% now. It is widely expected that the Fed will cut interest rates later this year, and they will stay neutral for most of 2026. Powell has received a modestly improved performance review, although some believe presidential pressure for rate cuts could be having the opposite effect. Overall, sentiment remains cautious about rates, despite a slightly more positive economic outlook.
Geopolitical: Israeli Prime Minister Benjamin Netanyahu is reportedly planning to annex parts of Gaza, starting with the buffer zone along the territory's perimeter, and eventually to claim all of Gaza as Israeli territory. This move, which the Trump administration allegedly backs, is aimed at preventing Netanyahu's extremist coalition from fracturing, particularly by appeasing far-right ministers like Finance Minister Bezalel Smotrich and National Security Minister Itamar Ben Gvir. The proposal involves giving Hamas a ceasefire ultimatum likely designed to be rejected, after which Israel would proceed with annexation. The plan has prompted international outrage given the widespread destruction and displacement already inflicted on Gaza. It could fuel further global recognition of a Palestinian state, as Western leaders like France's President Macron and potentially Britain's Prime Minister Keir Starmer consider such moves in response to Israel's actions.
View from our desk
Bitcoin’s resilience signals institutional maturity
The market absorbed Galaxy’s 80,000 BTC sale without disruption, with Bitcoin rebounding quickly to $119,000. A potential 3,782 BTC transfer today also failed to shake sentiment, showing strong dip-buying demand. This price behavior highlights a maturing market with deep liquidity and growing institutional presence. While we previously set a cautious year-end target of $150,000, current momentum suggests a higher ceiling. Citigroup now projects Bitcoin could reach $200,000 by the end of 2025, with a base case of $135,000. Other firms such as Bridge Capital and VanEck are similarly optimistic, supporting the view that pullbacks remain compelling entry points.
Ethereum gains ground as traders rotate out of Bitcoin
Ethereum has recently outperformed Bitcoin, with the ETH/BTC ratio rebounding off 2019 lows. Inflows into Ether ETFs have exceeded Bitcoin ETF flows for six straight days, reflecting a broader risk-on tone and increased investor appetite. The premium on Ethereum CME futures has also topped 10 percent annualized, surpassing Bitcoin’s futures premium. These dynamics are prompting basis traders to reallocate capital from Bitcoin into Ethereum, contributing to ETH’s relative strength and signaling increased institutional engagement.
Rate cut pressure mounts, but outlook remains cautious
Former President Trump and allies like budget director Russell Vought have renewed calls for the Federal Reserve to lower interest rates, citing a strong meeting with Chair Jerome Powell. Despite these efforts, the Fed remains cautious due to ongoing inflation concerns and a resilient economy. While political pressure may continue to build, we expect at most two rate cuts between late 2025 and early 2026, followed by a neutral policy stance. For now, the Fed appears unlikely to shift without more convincing signs of economic slowdown.
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The 1Konto Team
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