SignalPlus Macro Analysis: TACO Effect Fermentation, Crypto Market Turbulence Amid US-China Rivalry

2025-06-03 19:00

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In the second half of the year, the market may experience a period of calm before returning to the sharp volatility seen in the first half of the year.

Original Title: "SignalPlus Macro Analysis Special Edition: TACO"

Original Source: SignalPlus

Earlier this month, Financial Times columnist Robert Armstrong first introduced the little-known abbreviation "TACO," which stands for Trump Always Chickens Out, mocking the president for consistently backing down after putting up a tough front, ultimately choosing to retreat or let things slide. Armstrong suggested that in the face of the Trump administration's trade threats, opposing countries actually just need to "wait it out" to come out unscathed.

When the president was directly questioned about TACO during a White House press conference, the abbreviation started to receive mainstream attention, which naturally was not welcomed by the Trump administration.

Perhaps in response to this mockery, the Trump administration's stance became noticeably more hardline in the latter part of last week, escalating the tensions between the U.S. and China:

· Trump accuses China of "outright violation" of Geneva trade

· Treasury Secretary Bessent criticizes China for deliberately obstructing the export of rare earths critical to the U.S. supply chain

· Trade Representative Greer accuses China of intentionally delaying rare earth export approvals

· Beijing retaliates by accusing the U.S. of "misusing" semiconductor export controls

· The U.S. government further expands restrictions on technology licensing for China's tech industry

· The U.S. Commerce Department restricts the sale of chip design software and certain aircraft engine components to China

· Following the Harvard foreign student ban, U.S. Secretary of State Marco Rubio announces plans to revoke Chinese student visas

Overall, the market clearly shifted to risk-off mode in the latter part of last week, despite stock and bond volatility having fallen back to cyclical lows, the stock market has not been able to break new highs.

Earlier concerns about bond yield spikes have gradually eased, with the 30-year Japanese government bond yield following the U.S. bond lower, making it difficult to determine who is leading whom. This further indicates that the recent rise in yields is mainly due to risk-off behavior in the fixed-income market and concerns about the overall macro environment, rather than specific or structural issues, making us more confident that yields should steadily decline as we head into the summer.

In addition to the daily tariff-related news (which the market has already become accustomed to), the overall market sentiment still appears weak. Various assets lack a clear direction, and the market focus may shift to the non-farm payroll report later this week to see if it can continue to move against the trend under weakening survey data and economic growth expectations. Considering the recent softness in employment surveys and initial jobless claims data, coupled with the current high level of the stock market, the short-term risk may still lean towards the downside.

In the cryptocurrency space, despite recent mostly positive news, price performance remains lackluster. BTC and MSTR have both failed to effectively break through overhead resistance levels, and most mainstream tokens have fallen by about 5–10% in the past week.

A more positive note is that Blackrock's IBIT ETF saw a record high monthly inflow of over $6 billion; meanwhile, the open interest in ETH futures continues to rise alongside the price rebound in the first quarter, indicating that new long positions are still entering the market.

In the news, Stripe is reportedly in "serious discussions" with traditional banks about using stablecoins for transactions; and Trump Media has raised about $2.3 billion through equity and convertible bonds offerings for further BTC allocation. In addition, the SEC has officially dropped its lawsuit against Binance (and cannot reopen the case), symbolizing the end of an era in the cryptocurrency world and the beginning of a new one, albeit with more intervention from the traditional financial and political spheres.

However, in such a positive environment, BTC failed to hold onto its upward channel last week. When the market cannot respond positively to bullish news, it is an internal warning signal. Additionally, BTC's recent strength has not been confirmed in cryptocurrency-related stocks; for example, MSTR has not seen a simultaneous rise, and its leveraged ETF has experienced outflows, showing a significant deviation from the situation with BTC and ETH ETFs.

Since the beginning of the year, BTC has outperformed all macro assets, but short-term signs suggest that the market may face a more challenging phase. OGs and early adopters continue to take profits at highs, while mainstream buyers enter the market. If macro risks heat up again in the summer, will BTC experience a correction? Our basic view is that the market may trend sideways in the second half of the year, no longer experiencing as much volatility as in the first half. Wishing everyone a successful week of trading, and if possible, please try to avoid opening high-leverage BTC positions.