In today’s report, we delve into the implications of these developments on the crypto market, analyze the latest BTC price action, and highlight the technical, macroeconomic, and on-chain factors shaping the current landscape.

Here’s what we’ll cover today:

Let’s dive in!

The current market environment is being influenced by two key factors: rising geopolitical tensions and potential changes in global monetary policy. Tensions between the U.S. and China have intensified, with new measures and rhetoric indicating a possible escalation of the economic conflict.

At the same time, investors are closely monitoring developments in Japan, where the Bank of Japan is approaching an important interest rate decision. After years of maintaining an ultra-loose monetary policy, Japan shifted towards a more normalized rate environment. Market expectations for BOJ rate hikes shifted from March 2025 to April 2026.

The black line represents prior expectations, while the yellow line reflects the current outlook after the latest policy decision. Both lines show increasing odds of rate hikes, but the yellow line is notably lower, indicating a significant reduction in rate-hike expectations since the BOJ's last decision, and suggesting a more gradual tightening path through early 2026.

U.S. Treasury Secretary Scott Bessent noted that “there is a path” to an agreement with China over tariffs, following recent discussions with his Chinese counterparts in Washington. Bessent stated that the talks primarily focused on traditional issues such as financial stability and global economic early warnings, though he was uncertain whether President Trump had spoken directly with President Xi. As of early Today, China denies president Xi Jinping called president Trump as he claimed.

This comes as emerging market assets notably outperform their U.S. counterparts, with both equities and the U.S. dollar facing sustained downward pressure since the beginning of the year.

Overall, global markets are navigating a combination of geopolitical risk, which is contributing to ongoing volatility and a fragile investor sentiment.

Despite these struggles, both bitcoin and gold continued to not only rise since the start of trump’s tariff war, but actually outperform global markets, as can be seen on the chart normalized as of 04/01/2025. 

The crypto fear and greed index, a sentiment metric we’ve been tracking for some time, provides an objective and consistent data set. It currently shows a reading of 54, indicating neutral market sentiment. This comes after we saw a new low of 10, indicating extreme fear, in February, the lowest since the bear market lows of 2022. This suggests a healthy reset and could be an early sign of expansion.

Total Bitcoin spot ETF net inflows have remained positive throughout the past week, with the highest inflows occurring on Tuesday and Wednesday, when prices saw their sharpest increase.

This once again highlights how closely traditional trading appears to be tied to Bitcoin price action, despite recent trends showing some decoupling. Typically, flows align, meaning that good and bad days in stocks tend to reflect in Bitcoin and the broader crypto market.

Despite crypto sentiment turning neutral, traditional investor sentiment has taken a steep dive with the latest AAII survey showing the bull-bear spread falling to -34, one of its lowest points since the 2022 bear market lows. Over the past few weeks, this spread has dropped by more than 50 points, reflecting a sharp rise in bearish expectations.

Today, more than half of survey participants (55.6%) believe the market will fall over the next six months, while only 21.9% are optimistic. On the surface, it sounds like panic is setting in, but when you look closer, the picture tells a different story.

Despite the growing fear, retail investors are still holding onto their stocks.

Stock allocations have slipped just 3 percentage points, down to 67%, still a historically high level. For comparison, during the 2020 crash, stock allocations dropped much deeper, to around 55%.

Even though investors are feeling uneasy, they aren't acting on it. There’s a lot of noise, but very little real selling. Retail investors remain heavily invested, suggesting that beneath the surface fear, confidence in the market’s longer-term potential may still be strong.