Macro shock risk: White House hints at weaker payrolls, rates bid as crypto fails to catch the cut tailwind
Digital Asset Market: Bitcoin traded in a tight range just under $70,000 on Tuesday, briefly dipping with the U.S. stock market open before recovering to around $69,200, while ether, XRP, and solana fell more; analysts at Kaiko said the latest pullback, the steepest since the 2024 halving, occurred on low spot volumes, suggesting retail stepped aside and leveraged derivatives drove the swings, a view echoed by Wintermute, which expects continued range trading and said recent moves were amplified by crowded perpetual futures positioning. Attention is now on Wednesday’s delayed January U.S. jobs report, with consensus at 70,000 new jobs and 4.4% unemployment, though Trump administration officials Peter Navarro and Kevin Hassett hinted the data may be weaker than expected, helping push the 10-year Treasury yield down to about 4.14% even as bitcoin has struggled to benefit from recent Fed rate cuts. Meanwhile, U.S. spot bitcoin ETFs logged back to back net inflows for the first time in nearly a month, totaling about $616 million after $471.1 million on Friday and $144.9 million on Monday..
Macroeconomics: Taiwan has pushed back against U.S. calls to move 40% of its semiconductor supply chain to the United States, with Vice Premier Cheng Li-chiun saying the idea is “impossible” because Taiwan’s chip ecosystem has been built over decades and cannot simply be relocated. Her comments respond to U.S. Commerce Secretary Howard Lutnick’s onshoring target, announced after a recent U.S.-Taiwan trade agreement, that sought to shift a large share of Taiwan’s chip production to the U.S. during President Donald Trump’s term. Cheng emphasized that Taiwan’s overseas expansion, including U.S. investments, depends on keeping the industry anchored at home while continuing domestic investment, underscoring how difficult it is to transplant a tightly interconnected, highly specialized high-tech manufacturing network across borders. The agreement includes commitments for $250 billion in direct Taiwanese tech investment and $250 billion in credit to support U.S. expansion, while the U.S. reduced certain tariffs and offered other trade concessions, including higher quota access for tariff-free Taiwanese chip exports.
Equities: US equities edged higher as softer economic data increased expectations that the Fed could cut rates sooner, supporting valuations even as growth signals cooled. The Dow rose about 0.4% and built on a record close, the S&P 500 gained around 0.1%, and the Nasdaq was roughly flat as some mega-cap tech names slipped. December retail sales came in flat versus expectations for a gain, suggesting holiday demand slowed, and real spending lagged inflation, while the GDP-relevant control group dipped, raising the risk that fourth-quarter growth estimates will be revised down. At the same time, a slightly cooler employment cost index reinforced the view that wage pressures are easing, which tends to be equity-positive through lower rate expectations, with investors now looking to the next jobs report and potential payroll revisions as the key catalysts for the broader market’s direction.
The Fed and US Treasury: US 10-year Treasury yields slid nearly 6bps to about 4.15% after a weaker retail sales report reinforced expectations that the Federal Reserve will shift toward rate cuts, with markets increasingly focused on what that could mean for policy in 2026. Money markets are now pricing roughly a 25% chance that the Fed delivers three quarter-point cuts in 2026, up from expectations of two cuts just a week ago, reflecting rising conviction that slowing consumer demand could give policymakers more room to ease. Investors are watching upcoming employment and CPI data for signals that could further reshape the Fed’s 2026 decision path and the pace of potential rate reductions.
Geopolitical: Iran signaled a major willingness to compromise in upcoming indirect talks with the United States, with Iran’s atomic chief Mohammad Eslami saying Tehran could dilute its stockpile of uranium enriched to 60% if, in return, all financial sanctions are lifted. The report notes Washington has demanded Iran give up that stockpile, estimated by the UN nuclear agency at over 440 kg, while Iran continues to reject US efforts to fold its ballistic missile program into the negotiations. The article ties the opening to intense internal unrest and economic pain blamed on sanctions, and cites Supreme Leader Ayatollah Ali Khamenei urging public resolve and mass turnout for the revolution anniversary to deter foreign pressure. It also argues a likely outcome is a limited nuclear deal involving some sanctions relief without addressing missiles or regional militias, which would frustrate Israel and could raise risks of covert escalation, even as the US builds up forces in the region and analysts warn American bases and ships are more vulnerable than in past decades.
View from our desk
Bitcoin’s “Digital Gold” Thesis Still Breaks Under Stress
Bitcoin keeps failing the simplest stress test: when risk appetite deteriorates, it trades like a high-beta growth position, not a shelter. In the latest pullback, it moved in close step with growth-oriented equities, while physical gold pushed to fresh highs and continued to attract defensive allocations. The long-run store-of-value case still reads well on paper: capped supply, a decentralized network, and independence from governments, but scarcity alone does not earn safe-haven status. Until the market consistently prices bitcoin as a monetary asset rather than a levered expression of future confidence, its realized volatility and equity correlation will continue to expose the gap between the story and how portfolios actually use it.
ETF Outflows Look Small, The Price Move Says Liquidity Is Thin
The mechanics of the drawdown point to liquidity fragility more than any fundamental break in the network. Spot depth can appear fine in calm conditions, then vanish as volatility rises and participants step back, forcing price discovery into derivatives. That matters because derivatives-driven clearing is reflexive: liquidations and de-risking can push price far beyond what the underlying spot flows would imply. The most telling mismatch is flow versus impact. If ETF holdings are down only in the mid-single digits over a period when bitcoin is down by multiples, the market is signaling that “available liquidity” is shallow and the marginal seller is meeting a thinner bid than headline AUM suggests. In that setup, small reductions in demand or modest selling can produce outsized drawdowns, especially when positioning is crowded, and spot participation is light.
Semiconductors: America’s Taiwan Dependency Is Strategic, Not Transactional
Washington is learning that advanced chip supply is not something you reshuffle on a political timetable. Taiwan’s advantage is an ecosystem: specialized suppliers, extreme process know-how, talent density, and precision logistics built over generations, not a single fab you can relocate like a warehouse. That constraint collides with transaction-first diplomacy, because the outcome the US wants most, strategic freedom from Taiwan risk, is not deliverable quickly by incentives, tariffs, or procurement deals. Meanwhile, cross-strait tension turns what looks like an industrial policy problem into a geopolitical one: the US can negotiate trade terms and onshoring targets, but it cannot negotiate away semiconductor reality overnight. The near-term implication is continued policy pressure and subsidy spend, but the medium-term truth is that dependency unwinds slowly, and markets should treat chip supply resilience as a multi-cycle project rather than a headline-driven pivot.
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The 1Konto Team
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