From Stripe to Ripple: Is Crypto’s M&A Wave Just Getting Started?
Digital Asset Market: Stocks surged globally following positive tariff news, while Bitcoin lagged. The Nasdaq and S&P 500 gained around 3% after previous tariff-induced losses, driven by optimistic developments like a potential trade deal with South Korea and positive comments from Treasury Secretary Scott Bessent on China. Despite briefly crossing $80,000, Bitcoin slid back to $78,000, reflecting a "decoupling" from stock market trends unfavorable to Bitcoin bulls.
On the positive side, big deal-making seems to be coming back to the crypto markets. Ripple, a crypto startup, has announced its biggest acquisition to date, agreeing to purchase prime brokerage firm Hidden Road for $1.25 billion. This deal is one of the largest in the digital asset space, surpassing Stripe’s $1.1 billion acquisition of the stablecoin payments platform Bridge. Hidden Road, founded in 2018, provides clearing, prime brokerage, and financing services across various markets, serving over 300 institutional clients. The acquisition will enable Hidden Road to use Ripple’s RLUSD stablecoin, launched in December, as collateral for its products. Ripple CEO Brad Garlinghouse explained that Hidden Road sought external capital due to growth constraints from balance sheet limitations. This acquisition aligns with the industry's integration into traditional finance, requiring robust infrastructure to support financial institutions. Ripple's acquisition still requires regulatory approval and is expected to close by the third quarter of 2025. The regulatory environment has been favorable for Ripple following the SEC's dropped legal case against it and the re-election of Donald Trump as U.S. president, who supports crypto-friendly policies. Such deals are more feasible in a supportive regulatory environment, contrasting with previous SEC challenges under Gary Gensler's leadership.
Macro Economics: The escalating U.S.-China trade tensions have heightened after President Donald Trump threatened to impose an additional 50% tariff on Chinese imports unless Beijing withdraws its recent 34% tariffs on American goods. China's Commerce Ministry strongly opposed Trump's ultimatum, vowing to "fight to the end" and implement countermeasures. Both nations have been engaged in a tit-for-tat tariff exchange, and despite China's economic vulnerabilities—given it exports significantly more to the U.S. than it imports—Beijing appears ready for an intensified trade war. The People’s Bank of China recently set the yuan at a weaker level, signaling potential devaluation as a warning to Washington. Meanwhile, U.S. Treasury Secretary Scott Bessent claims the U.S. holds a strategic advantage, given its trade deficit with China, and is confident of negotiating favorable trade deals with other nations. The U.S. administration aims to bring domestic jobs back and counter nontariff trade barriers, but both sides are bracing for economic impacts in an increasingly turbulent trade landscape.
Equities: U.S. stocks rallied on Tuesday, boosted by hopes for tariff deals, although gains tapered off by late morning. The S&P 500 surged over 2%, the Nasdaq Composite climbed around 2.4%, driven by a 5% rise in Nvidia, and the Dow Jones Industrial Average added roughly 2%, contributing around 850 points. This came after Monday's volatile session, which was affected by President Trump's rapid tariff measures, which saw significant losses. Spirits lifted after U.S. Treasury Secretary Scott Bessent announced the start of bilateral trade talks with Japan, countering fears that the White House was unwilling to negotiate tariffs despite trade adviser Peter Navarro's previous comments. Meanwhile, the Nikkei 225 in Tokyo rebounded 6% from a recent plunge as investors welcomed U.S. openness to discussions. However, tensions remained as China vowed to "fight to the end" if the U.S. continued its aggressive tariff strategies, responding to Trump's threat to levy additional tariffs if China did not alter its retaliatory plans.
The Fed and US Treasury: President Donald Trump's aggressive tariffs have raised recession risks, as Wall Street economists predict that rising inflation and policy uncertainty could reduce consumer demand, business investment, and increase unemployment. The tariffs are expected to slow growth, and a refusal to lower trade barriers could lead to a recession. Goldman Sachs raised its recession probability to 45%, anticipating a GDP growth rate of just 0.5% in 2024 and core inflation at 3.5%, above the Federal Reserve’s 2% target. JPMorgan Chase economist Michael Feroli forecasts negative GDP growth and rising unemployment, while UBS envisions a potential technical recession. These economic forecasts have pressured the Federal Reserve to consider its response, with Chair Jerome Powell indicating a wait-and-see approach to rate changes. However, with ongoing stock market declines, traders now expect the Fed to cut interest rates potentially four times within the year, reducing the benchmark rate by a full percentage point. JPMorgan CEO Jamie Dimon also noted that the tariffs would boost inflation and slow the economy, emphasizing the need for a swift resolution to minimize negative, cumulative impacts.
Geopolitical: The Trump administration claims that it’s been approached by over 70 countries seeking trade negotiations, with Japan potentially getting priority despite tensions over non-tariff barriers. The EU is strategizing its response, wary of US tariffs and potential rebalancing measures. Trump's discussions with Israel and views from his economic adviser suggest countries may need to make significant concessions, like increased market access for US exports or defense spending, to avoid tariffs. The EU might face protracted negotiations, eyeing a tougher stance against China as leverage. The bloc plans measures to support domestic industries, with countries like Spain already offering substantial support, though broader EU unity is hoped for. Given the vast number of bilateral discussions and agreements needed, we can safely say that this issue will consume the presidential office for a good part of this year.
View from our desk
Cryptocurrencies have demonstrated surprising resilience despite broader market turbulence. The initial tariff-related selling pressure briefly pushed Bitcoin below the $80K mark, but it quickly found strong support and has since rebounded. With the most significant challenges likely behind us, we believe favorable developments could substantially boost crypto prices, making potential upside greater than lingering downside risks.
Meanwhile, traditional financial markets remain cautious as recession fears and trade uncertainties continue to weigh heavily on investor sentiment. Markets are closely watching President Trump’s anticipated Independence Day announcement amid reports that the White House is considering a 20% tariff on most imports. Although details are still under discussion—including the possibility of a "reciprocal," country-by-country strategy—this approach could have broader and more lasting implications than previous targeted tariffs.
According to reports, the proposal is scheduled for release on April 2. If the plan effectively promotes fairness in international trade and increases federal revenue as intended, it may help reduce current market uncertainty. We anticipate a relatively positive market reception, given investors’ eagerness for clarity and direction on global trade issues.
Happy Trading!
The 1Konto Team
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