QCP Asia Colour - 10 April 25

Make America Wealthy Again

If “Make America Wealthy Again” were a stage production, last night marked its dramatic crescendo. President Trump authorised a 90-day pause on proposed tariff hikes, while introducing a blanket 10% reciprocal tariff on all countries except China. Markets responded with fervour: the S&P 500 rallied 9.51% and Nasdaq spiked 12.02%. Bitcoin did not let the market down as it advanced 8.43% while Ethereum added an impressive 13.38%. The crypto market saw $75 million in shorts liquidated within 60 minutes of the announcement.

Respect is Earned, Not Given

In contrast to his broader olive branch, President Trump doubled down on China, escalating tariffs on Chinese imports to 125%, citing Beijing's lack of "respect for world markets". The Chinese Yuan responded accordingly, tumbling to an 18-year low at 7.3498 this morning. Yuan devaluation serves as a partial cushion, preserving export competitiveness in the face of higher U.S. tariffs. With China singled out so explicitly, market participants are bracing for Beijing's counterpunch. Should retaliation materialise in force, the exuberant rally could quickly morph into a classic bull trap.

Not Out of the Woods Yet

The surprise policy pivot temporarily soothed market anxiety, driving short-end crypto vols lower. Still, we advocate caution. Our desk continues to observe topside selling in May and June, suggesting that market makers are using the rally as an opportunity to offload unwanted positions. That said, the purchase of December $100K calls points to longer-term optimism for BTC to revisit the $100K milestone later towards the end of this year.

All eyes now turn to tonight’s CPI data, which is poised to refocus attention the domestic economy. A weaker print would be welcome, helping to offset the inflationary overhang introduced by the blanket tariff policy.