Bitcoin has shown remarkable resilience, maintaining a steady trading position above $87,000 during the Asian afternoon trading hours on Wednesday. This stability comes as traders closely monitor U.S. economic data releases and the upcoming implementation of U.S. tariffs scheduled for April 2. With the majority of market participants in a wait-and-watch mode, the focus remains on potential market movements in response to these developments.
In the past 24 hours, major cryptocurrencies have experienced minimal fluctuations. Notably, Solana’s SOL, XRP, BNB from BNB Chain, and Ethereum (ETH) have all risen by less than 3%. However, memecoin Dogecoin (DOGE) has distinguished itself with a notable surge of 5.5%. This marks the second consecutive day of gains for DOGE, buoyed by a robust performance from related tokens such as Pepe (PEPE) and Mog (MOG). The trend highlights a continued tendency among these cryptocurrencies to act as a “beta bet” correlated to ETH’s strength.
Meanwhile, Shiba Inu (SHIB) has gained significant traction, surging 11%, thanks to an increasing appetite for riskier meme coins. This rise is also reflected in a staggering 228% jump in activity on its native ShibaSwap exchange over the past month. Current data shows that open interest in SHIB-tracked futures has soared by over 20% since Sunday, suggesting heightened expectations of further market volatility.
Despite the positive movements within the cryptocurrency sphere, concerns about a potential U.S. economic slowdown loom large. A swift unwinding of momentum trades in equities has led financial managers to adopt a defensive posture in their strategy, raising caution among investors.
Augustine Fan, Head of Insights at SignalPlus, commented, “We expect markets to continue their soft rebound from last week’s downturn through the end of the month. The next significant catalyst will be the ‘liberation day’ tariff announcement from Trump set for April 2. Rumors of a milder tariff response could significantly aid in recovering some of the recent technical damage in U.S. equities, potentially igniting a global rally, in tandem with the recent rebound in EU and Chinese stocks.”
Fan further noted, “The relationship between crypto and equities will persist in the foreseeable future, as we anticipate no unique catalysts emerging shortly. However, ongoing M&A announcements involving Coinbase and Kraken bolster our confidence in the long-term viability of a bullish market.”
Additionally, traders at QCP Capital observed that the upcoming quarter, particularly April, has historically offered one of the most favorable conditions for risk assets, second only to the festive rally in December. The S&P 500 has demonstrated an average annualized return of 19.6% during the second quarter, with Bitcoin also achieving its second-best median performance during this period, trailing only the fourth quarter. Although options traders have remained cautious, this historical performance does raise optimism.
“Options markets are exhibiting caution, as the call skew has not significantly shifted toward calls, indicating that traders are keen to observe developments regarding the tariff situation before making large commitments,” they noted. Furthermore, attention is shifting towards the upcoming Personal Consumption Expenditure (PCE) data, anticipated to serve as the next key market catalyst.
The PCE index is crucial as it captures inflationary trends across various consumer expenses and can significantly influence Federal Reserve interest rate decisions. Higher PCE readings may signal rising inflation, leading to potential rate hikes that could temper risk appetite and apply downward pressure on Bitcoin prices as investors flock to safer assets. In contrast, lower PCE data suggests more moderate inflation, potentially prompting rate cuts or stable policies, thereby boosting liquidity and supporting Bitcoin’s price as both a speculative asset and a safeguard against inflation.
Scheduled for release on March 28, the upcoming PCE data could have considerable ramifications for market sentiment, with Bitcoin’s market reaction likely aligned with how the data shapes Fed expectations. Historical patterns suggest that significant volatility often ensues as traders recalibrate their positions in response to the data.
