In the face of escalating trade war concerns, digital currency investors are seeking safety, selling assets to minimize losses, and experts are raising concerns.
Volatility is surging because of trade war anxieties and the Federal Reserve’s aggressive approach, causing crypto investors to reduce their long-term holdings, resulting in a substantial decrease in open interest in futures contracts. Matrixport, a blockchain company based in Singapore, highlighted in a recent X update that open interest in Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) futures has experienced a considerable decline.
The blockchain company indicates that numerous traders are adopting a wait-and-see approach, awaiting clearer indications before re-entering the market, with the Fed’s actions being their primary concern.
Independent analyst Markus Thielen mentioned that Ethereum’s open interest has declined to levels observed in the summer of 2024. Despite Trump’s recent social media posts regarding a possible strategic Bitcoin reserve and the upcoming White House crypto conference, the market remains cautious, with participants decreasing their involvement. Toncoin (TON) Value Forecast for March 26th
The trade disputes intensified after former U.S. President Donald Trump proposed the idea of imposing a 25% tariff on products from Mexico and Canada, starting March 4, destabilizing financial markets.
Matrixport’s analysts had previously cautioned that Bitcoin’s price could encounter ongoing downward pressure until April due to a stronger dollar and changing market conditions. As Bitcoin becomes increasingly integrated with conventional finance, analysts now expect the price decline to continue into April, adding that Bitcoin might attempt a recovery to previous peaks following this adjustment.
Matrixport also emphasized the increasing influence of Wall Street investors. While wealth and asset management companies view Bitcoin as a long-term investment, hedge funds are utilizing arbitrage techniques to capitalize on its instability.
Per data from Matrixport, protective funds possess Bitcoin ETFs of $10 billion in value, whereas the sum total inflow attained $39 billion. This hints that no less than 25% of the Bitcoin ETF resources are in connection with arbitrage operations.
