Markets Daily Crypto Roundup: Crypto Update | Despite Trade War Uncertainty, $175K Bitcoin Ahead

Released on February 4, 2025 | Host: CoinDesk

In this episode of Markets Daily Crypto Roundup, CoinDesk delves into the latest movements in the cryptocurrency markets amidst ongoing trade war uncertainties. Host Christine engages in an in-depth conversation with Usman Ahmad, CEO and Co-Founder of Zodia Markets, to explore Bitcoin’s resilience, institutional adoption, and the potential impact of geopolitical tensions on digital assets.

Bitcoin’s Resilience Amid Trade War Uncertainty

The episode begins with Christine addressing Bitcoin’s recent price fluctuations influenced by the U.S. trade war under President Donald Trump. Bitcoin experienced a significant recovery from below $92,000 to over $100,000 following a deal with Canada and Mexico to delay tariffs. However, the momentum was halted once tariffs against China were enforced.

Usman Ahmad provides his insights:

“Bitcoin and other crypto assets react very similar to other macro risk-on assets... We saw the recovery into Monday, regaining some of those losses.” (01:51)

Ahmad emphasizes that cryptocurrencies are not isolated from global economic factors. He notes that Bitcoin often mirrors the behavior of traditional risk assets, debunking the notion of it being entirely detached from the global financial system.

Is Bitcoin a Risk Asset or a Safe Haven?

Christine probes the dual nature of Bitcoin, questioning whether it serves as a volatile risk asset or a stable digital safe haven as many proponents suggest.

Ahmad responds:

“Bitcoin is ultimately a risk asset. When there's uncertainty, it lends itself to sell-offs, leading to a depression in the price.” (03:37)

He acknowledges Bitcoin's potential as "digital gold" but underscores its inherent link to global economic sentiments, positioning it more accurately as a risk asset influenced by macroeconomic and geopolitical events.

Institutional Positioning in Uncertain Times

The discussion shifts to how institutional players are navigating the current climate. Christine asks about the strategies adopted by large investors amid trade tensions.

Ahmad explains:

“Institutions like MicroStrategy may be buying the dip, dollar-cost averaging their positions, and possibly increasing their holdings.” (04:41)

He highlights the varied approaches of institutional investors, from accumulating assets during downturns to assessing short-term volatility for strategic entry points. Ahmad also points out the rapid recovery characteristic of the crypto market, attributing it to the 24/7 trading environment.

Long-Term Outlook Amid Protracted Trade Wars

Christine inquires about the long-term implications if the trade war extends throughout Trump's term, particularly concerning market risk appetite.

Ahmad offers his perspective:

“As people become more comfortable with uncertainty, we might see an upward trend in digital assets, including Bitcoin, driven by a more supportive U.S. administration.” (06:12)

He anticipates that a sustained period of uncertainty could ultimately foster a more favorable environment for digital assets, especially if regulatory clarity improves and the U.S. adopts a leadership role in the digital asset ecosystem.

Impact of Tariffs on Crypto Markets

The conversation then explores how tariffs, typically increasing consumer goods prices, might affect risk assets like cryptocurrencies.

Ahmad shares his thoughts:

“Normalization of tariffs could bring positive tailwinds for digital assets. Clear regulations would provide certainty, allowing ecosystem actors to build and innovate more effectively.” (07:18)

He believes that as tariffs stabilize, the crypto market could benefit from increased regulatory clarity and a more predictable trading environment, fostering growth and stability.

Sovereign Wealth Funds and Crypto Adoption

Christine brings up the potential establishment of a U.S. sovereign wealth fund, speculating on its implications for Bitcoin holdings.

Ahmad responds thoughtfully:

“A sovereign wealth fund holding Bitcoin as part of a diversified portfolio would be a logical and sensible move, providing strategic value for the U.S. government.” (10:05)

He underscores the significance of sovereign wealth funds as major institutional investors and suggests that their direct allocation to Bitcoin would signal robust institutional adoption, enhancing the credibility and stability of the crypto market.

Institutional Adoption as a Market Boon

Christine references Norway’s sovereign wealth fund and BlackRock’s interest in Bitcoin, questioning whether such trends will benefit the crypto markets.

Ahmad concurs enthusiastically:

“Institutional adoption, especially by sovereign wealth funds and pension funds allocating directly to Bitcoin, is a huge boon for the ecosystem and signifies true institutional support.” (12:22)

He highlights recent instances where pension funds have directly invested in Bitcoin, emphasizing that such moves validate the asset’s legitimacy and attract further institutional interest.

Future Demand for Crypto Amid Economic Uncertainty

In discussing future trends, Christine asks whether the current trade war uncertainty will surge crypto demand or suppress it.

Ahmad expresses optimism:

“I believe we’re going to see a surge in crypto demand, aiming for Bitcoin to reach $175K by the end of the year, aligning closely with my initial prediction.” (13:45 – 13:55)

He confidently forecasts continued growth in Bitcoin’s value, attributing it to increasing institutional adoption and the evolving regulatory landscape that supports digital asset innovation.

Anticipation for U.S. Regulatory Developments

Christine mentions upcoming remarks by David Sacks, the U.S. crypto czar, regarding the Trump administration’s strategy for digital assets.

Ahmad shares his expectations:

“I hope to see a clear regulatory framework that fosters innovation and provides certainty for market participants. The U.S. needs to lead in establishing global standards for crypto regulation.” (14:32)

He underscores the importance of regulatory clarity in enabling businesses to operate confidently within the crypto space, advocating for the U.S. to spearhead global regulatory initiatives to harness the transformational potential of blockchain technology.

Looking Ahead to Consensus Hong Kong

Concluding the episode, Christine asks Ahmad about his upcoming participation in Consensus Hong Kong.

Ahmad provides a preview:

“I’ll be on a panel discussing liquidity in the digital asset ecosystem. It’s an exciting opportunity to engage with global leaders and explore innovative solutions for enhancing market liquidity.” (16:41)

He expresses enthusiasm for the conference, anticipating insightful discussions and the opportunity to contribute to the advancement of the digital asset landscape.

Conclusion

In this episode, Markets Daily Crypto Roundup offers a comprehensive analysis of Bitcoin’s performance amidst trade war tensions, highlighting its behavior as a risk asset and the pivotal role of institutional adoption in shaping its future. Usman Ahmad’s insights provide a balanced perspective on the interplay between geopolitical factors and the evolving regulatory environment, underscoring the optimistic outlook for Bitcoin reaching $175K by year-end. The discussion encapsulates the dynamic nature of the crypto markets and the critical importance of regulatory clarity in fostering sustained growth and innovation.

For more insights and updates, tune into CoinDesk’s Markets Daily Crypto Roundup and join industry leaders in navigating the rapidly evolving world of cryptocurrency.