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Bitcoin tumbles 6% on disappointment about US strategic reserve
Bitcoin fell nearly 6% on Friday, expanding the losses for the second session amid renewed selling pressures after the disappointing reveal of the US strategic reserve plans.
Bitcoin also sustained losses after Wall Street’s steep decline, with the global trade war still weighing on the financial markets and growth forecasts.
The Price
Bitcoin fell 6% at Bitstamp today to $84,713, with a session-high at $91,277.
On Thursday, bitcoin marked the first loss in three sessions as US stock indices swooned.
Crypto Market Value
The market value of cryptocurrencies fell by over $130 billion to a total of $2910.
US Strategic Reserve
US President Donald Trump signed an executive order forming a crypto strategic reserve that includes bitcoin, in a step aimed at bolstering US status as leader in the crypto market.
Trump said that other cryptocurrencies such as ethereum, solana, cardano, and ripple, will be among the assets in the reserve, which proved disappointing to bitcoin supporters who refused the inclusion of other cryptocurrencies.
US officials noted that the reserve will include cryptocurrencies already owned by the US government after seizures and won’t cost taxpayers a cent.
The US currently owns $16.4 billion worth of bitcoin, and $400 million worth of seven other cryptocurrencies, most from seizures related to criminal and civil cases.
The order also allows for the Treasury and Trade Departments to develop financially-neutral strategies to acquire more bitcoin, provided it doesn’t put additional costs on US taxpayers.
Crypto experts were disappointed by the lack of actual bitcoin purchases by the government, which would’ve boosted prices.
There are also concerns that a US strategic reserve would hurt the status of bitcoin as a decentralized currency, and would be used later by the government to settle debts or manipulate the market.
Wall Street
Wall Street marked massive losses on Thursday, with both S&P 500 and NASDAQ hitting four-month lows, amid mounting concerns about Trump’s aggressive trade policies.
US dollar deepens losses to four-month low before labor data
The US dollar fell in European trade on Friday against a basket of major rivals, widening losses for the fifth straight session and hitting a four-month low, and on track for the heaviest weekly loss since 2022.
It comes amid positive sentiment in the markets after the announcement of a massive German stimulus plan, while Trump decided to delay his tariffs on Canada and Mexico for a month.
Now investors await important US jobs data, which will provide clues on the path ahead for US interest rates.
The Index
The dollar index fell 0.55% to 103.56, the lowest since November 5, with a session-high at 104.24.
On Thursday, the index lost 0.15%, marking the fourth daily loss in a row.
Weekly Trades
The index is down 3.7% so far this week, on track for the heftiest weekly loss since November 2022.
Positive Sentiment
The markets are awash with positive sentiment after German coalition parties announced plans to set up an infrastructure fund valued at 500 billion euros and change borrowing rules to boost military spending and growth.
Otherwise, the White House announced exemptions to some automakers from the 25% tariffs on Canada and Mexico for a month.
US Rates
Fed Governor Christopher Waller said on Thursday said he’s strongly against a rate cut at the Fed’s March meeting, even as he thinks that rate cuts later this year could be appropriate if inflation continues to peter out.
New York Fed President John Williams said the US tariffs will likely push inflation higher, but he believes current interest rate policies are suitable and don’t require changes.
According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in March stood at just 5%.
US Jobs
Later today, investors await a batch of crucial US jobs data, with the US economy expected to have created 159 thousand new jobs last month, up from 143 thousand in January, while unemployment is expected to remain at 4.0%.
Gold rises cautiously before US labor data
Gold prices rose in European trade on Friday, resuming gains after a hiatus on Thursday, and about to mark a weekly profit as the dollar loses ground.
The current gains are limited as traders shun big positions before major US labor data, expected to provide crucial pricing for the odds of a Fed rate cut in March.
Prices
Gold prices rose 0.15% today to $2914 an ounce, with a session-low at $2896.
On Thursday, gold lost 0.3% away from a week high at $2929.
Weekly Trades
Gold prices are up 2% so far this week, on track for the ninth weekly profit in two and a half months.
The Dollar
The dollar index fell 0.25% on Friday, extending losses for the fifth straight session and about to hit four-month lows at 103.76 against a basket of major rivals.
The dollar was hurt after German parties announced massive stimulus plans, while there were concerns that US President Trump’s tariffs could hurt growth.
Fed Governor Christopher Waller said on Thursday said he’s strongly against a rate cut at the Fed’s March meeting, even as he thinks that rate cuts later this year could be appropriate if inflation continues to peter out.
New York Fed President John Williams said the US tariffs will likely push inflation higher, but he believes current interest rate policies are suitable and don’t require changes.
According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in March stood at just 5%.
US Jobs
Later today, investors await a batch of crucial US jobs data, with the US economy expected to have created 159 thousand new jobs last month, up from 143 thousand in January, while unemployment is expected to remain at 4.0%.
SPDR
Gold holdings at the SPDR Gold Trust fell 1.72 tons yesterday to a total of 898.64 tons, the lowest since February 20.
Euro on track for biggest weekly profit in 16 years
The euro rose in European trade on Friday against a basket of major rivals, resuming gains against the dollar and trading near four-month highs, and about to mark the biggest weekly profit in 16 years.
The recently announced massive German stimulus plans accelerated inflation forecasts in the eurozone, which might prompt the ECB to tighten its monetary policies once more.
The European Central Bank voted on Thursday to cut interest rates to December 2022 lows, the fifth such cut in a row, with the bank expecting a pause in the cycle of rate cuts in April.
The Price
The EUR/USD pair rose 0.3% today to $1.0819, with a session-low at $1.0779.
The pair closed down 0.1% on Thursday, the first loss in four days on profit-taking away from four-month highs at $1.0853.
Weekly Trades
The EUR/USD pair is up 4.3% so far this week, marking the first weekly profit in three weeks, and the largest weekly profit since March 2009.
Massive German Spending Plan
Germany’s coalition parties agreed to form an infrastructure fund with a budget of 500 billion euros, while changing borrowing rules to bolster military spending and economic growth.
Such massive plans only serve to underpin the euro as the debt limiters are lifted and growth accelerated.
ECB
The European Central Bank cut main borrowing rates by 25 basis points to 2.5% as expected, noting in its statement that inflation has slowed down in line with forecasts.
The ECB now expects inflation to hit 2.3% this year, before slowing down to 1.9% in 2026, before rising to 2% in 2027.
The ECB reduced forecasts for eurozone economic growth in 2025 to 0.9%, and in 2026 to 1.2%, and in 2027 to 1.3%.
Lagarde
ECB President Christine Lagarde said the decision to cut interest rates was in line with economic developments and data in the eurozone.
She noted that inflation started to fall considerably in line with forecasts, and will likely settle at the targets sustainably.
She added that the decision to cut or maintain interest rates in the future will rely on upcoming data and developments.
European Rates
Reuters reported that the ECB policymakers expect a pause in rate cuts in April before embarking on another round of cuts
The odds of an ECB rate cut in April is now less than 50%, compared to a 60% chance next week.
Interest Rate Gap
The US-eurozone interest rate gap will likely expand to 185 basis points in favor of the US, which continues to underpin the US dollar against the euro.