OTC Weekly Trading Insights (04/04/2025)

Top Interest of the WeekPAX Gold ($PAXG) is a stablecoin backed by physical gold, issued by Paxos. Amid the heightened uncertainty stemming from the global trade war, investors turned to PAXG tokens to gain exposure to gold. Despite a downturn in the broader cryptocurrency market due to increased risks, PAXG achieved a new all-time high of $3,195 on exchanges, while the PAXG/BTC trading pair also hit a four-month peak. This surge was driven by robust demand for this safe-haven asset within the crypto space for tactical portfolio allocation.First Digital USD ($FDUSD), a USD-pegged stablecoin issued by First Digital Trust, encountered negative sentiment when Justin Sun, the founder of Tron, alleged that the issuer was effectively insolvent and unable to return funds to customers. Following Sun's initial post on X, the price of $FDUSD plummeted to $0.8726 USDT. However, it gradually recovered to 0.99 USDT after the issuer addressed the allegations. Both parties held press conferences, which helped restore market confidence, leading to $FDUSD trading around the 0.9950 USDT mark.Overall MarketSource: TradingViewThe above chart is the BTC price in the daily candle chart at the log scale.Our analysis from the previous week suggested that Bitcoin's price is expected to fluctuate between $80,000 and $90,000. We also raised concerns regarding the impending reciprocal tariffs introduced by President Trump.Last Friday, the core PCE price index exceeded expectations, leading to market concerns about the Federal Reserve's strategy for interest rate cuts in 2025. With persistent inflation in the US and the potential effects of tariffs on prices, the market has reduced the probability of a shift towards a more accommodative monetary policy from the Federal Reserve this year. While tariffs may also affect consumer spending and indirectly decrease demand for goods and services, potentially leading to a reduction in inflation, the numerous variables involved make it difficult to ascertain the extent of their negative impact on inflation.On Wednesday afternoon, Bitcoin ($BTC) experienced a remarkable surge, surpassing the $89,000 mark following President Trump's announcement that universal tariffs would be set at 10% instead of the previously proposed 20%. However, this upward momentum was short-lived as the market quickly reversed direction after additional information regarding reciprocal tariffs came to light. Following the press conference, BTC experienced a sharp decline, dropping below $83,000, which coincided with a more than 2% decrease in the S&P 500 index after market close.Our analysis suggests that the market's initial reaction to the decline in risk assets was expected. We anticipate that this downward trend will continue for an extended period as other countries develop their responses to the tariffs imposed by the United States.Historically, the United States has employed tariffs to shield domestic industries from foreign competition, a strategy prominently utilized during the early years of the Great Depression. A defining example is the Smoot-Hawley Tariff Act of 1930, which dramatically increased tariffs on over 20,000 imported goods. Signed into law by President Herbert Hoover, this legislation aimed to protect American farmers and manufacturers struggling amid the economic downturn that began with the stock market crash of 1929. However, the policy backfired spectacularly. Rather than bolstering the U.S. economy, it provoked swift retaliation from 25 trading partners, including Canada and several European nations, who imposed their own tariffs on American goods. This tit-for-tat escalation triggered a severe contraction in international trade, with global trade plummeting by approximately 66% between 1929 and 1934. According to our analysis, we expect that other nations will initially respond to the newly imposed U.S. tariffs by implementing their own tariffs on American products. This is likely to initiate a negotiation phase between the United States and these countries. Through this process, the U.S. has the opportunity to redefine the global trade landscape and enhance its position within it. If negotiations proceed favorably and the U.S. secures its objectives, we anticipate a shift in market sentiment towards a more risk-on attitude. However, this process may take several months and could potentially reverse. Currently, our outlook remains bearish for the near term, with a shift to a bullish stance anticipated only after the Federal Reserve intervenes and announces interest rate cuts to stimulate the economy.Macro at a glance Last Thursday (25-03-27)In the fourth quarter of 2024, core PCE prices in the United States increased by 2.6%, which is slightly below the anticipated 2.7% but an increase from the 2.2% recorded in the third quarter. The Federal Reserve implemented a 50 basis point rate cut last September, followed by two rate cuts of 25 basis points each after.The US GDP experienced a quarterly growth of 2.4% in Q4 of last year, surpassing the expected growth rate of 2.3%.Initial jobless claims in the US continue to remain low, with a report of 224,000 claims last week.Last Friday (25-03-28)UK GDP experienced a quarterly growth of 0.1% in the last quarter, aligning with market forecasts. The annual growth rate increased to 1.5% in Q4, up from 0.9% in Q3.In the US, the PCE price index recorded a year-over-year increase of 2.5% in February, meeting market expectations. However, the core PCE price index rose by 2.8% annually, surpassing the anticipated 2.7%. This indicates that inflation in the US remains persistent, suggesting that the Federal Reserve is likely to maintain the current interest rate for an extended period while awaiting a decline in inflation towards its 2% target.On Monday (25-03-31)China's manufacturing PMI for March was reported at 50.5, surpassing the anticipated 50.4 and February's figure of 50.2. Despite the challenges posed by US tariffs on Chinese exports, the manufacturing PMI indicates that the Chinese economy is experiencing a phase of expansion.On Tuesday (25-04-01)The Reserve Bank of Australia has maintained its interest rate at 4.1%, unchanged. Governor Bullock indicated that the central bank is prepared to take action in response to the uncertainties stemming from the escalated trade war. In the Eurozone, the Consumer Price Index (CPI) is anticipated to show an annual increase of 2.2% in March, while core CPI is expected to rise by 2.4% annually. This inflation data implies that the European Union is in a better position than the Federal Reserve in achieving the 2% inflation target, potentially enabling the European Central Bank to implement monetary policy adjustments more swiftly.In the United States, job openings reported in the JOLTS survey decreased from 7.762 million in January to 7.568 million in February, falling short of the market forecast of 7.690 million.On Wednesday (25-04-02)The US ADP nonfarm employment report indicates that 155,000 new jobs were created in March, surpassing the anticipated 118,000. President Donald Trump announced that the US will implement a 10% universal tariff on all imports beginning April 5. This initial rate will be succeeded by higher "reciprocal" tariffs ranging from 11% to 50% on goods from 60 countries starting April 9.Initially, the risk market experienced a surge following the announcement of the 10% universal tariff, as expectations had been set for a 20% tariff. However, once the specifics of the reciprocal tariffs were revealed, all risk assets plummeted. Bitcoin fell to $82,500, while Ethereum dropped below the $1,800 mark.Convert Portal Volume ChangeThe above table shows the volume change on our Convert Portal by zone. Last week, the US core Personal Consumption Expenditures (PCE) price index surpassed market expectations, raising concerns among investors about the Federal Reserve's potential tightening of monetary policy. The tariffs imposed by the US government have sparked forecasts of a rising inflation rate in the near future. Following the release of the unexpectedly high core PCE price index last Friday, risk assets faced a downturn. Justin Sun, the founder of Tron ($TRX), took to social media to assert that First Digital Trust, a stablecoin issuer, was essentially insolvent, which played a role in the de-pegging of $FDUSD.In the Other sector, robust demand for trading led to a 13.7% increase in trading volume, primarily driven by heightened interest in FUNToken ($FUN) and the stablecoin First Digital USD ($FDUSD).In the Payments sector, trading volume rose by 8.5% last week, largely propelled by market enthusiasm for Bitcoin ($BTC) and Ripple ($XRP).In the Proof of Work (POW) sector, trading volume experienced a 4.1% increase, primarily attributed to the demand for Bitcoin ($BTC).Why trade OTC?  Binance offers our clients various ways to access OTC trading, including chat communication channels and the Binance OTC platform (https://www.binance.com/en/otc) for manual price quotations, Algo Orders, or automated price quotations via Binance Convert and Block Trade platform (https://www.binance.com/en/convert) and the Binance Convert OTC API. Email: [email protected] for more information.Join our Telegram (https://t.me/BinanceOTC) to stay up to date with the markets!