MARKET COMPASS – February 24, 2025
European stock markets are mixed as they try to digest the German elections, but futures contracts are pointing to a positive opening for Wall Street indices, which posted their worst performance of the year on Friday. Investors are awaiting key economic indicators for the US this week, including the PCE report and GDP data. Also on the agenda is Nvidia, which will release its quarterly results on Wednesday. However, it is worth noting that the focus of the markets is on the new tariff plans put forward by US President Trump and his administration. Although concerns that additional tariffs may increase inflation and suppress corporate profitability persist, the market still does not seem to have fully reflected the impact of the tariffs in pricing. In addition to traditional markets looking for direction amid uncertainties, digital assets, which have been shaken by the hacking incident, are relatively calmer. We maintain our expectation for crypto assets to be sideways-volatile in the short term, slightly pressured in the medium term and bullish in the long term.
From the short term to the big picture
Trump’s victory on November 5, one of the main pillars of our bullish expectation for the long-term outlook in digital assets, produced a result in line with our predictions. In the process that followed, the appointments made by the president-elect and the increasing regulatory expectations for the crypto ecosystem in the US, as well as the emergence of BTC as a reserve, continued to take place in our equation as positive variables. Then, 4 days after the new President took over the White House, he signed the “Cryptocurrency Working Unit” decree, which was among his election promises, and we think that the positive reflection of the outputs it will produce in the coming days on digital assets may continue.
On the other hand, the expectations that the FED will continue its interest rate cut cycle, albeit on hiatus for now, and the fact that the volume in crypto-asset ETFs indicates an increase in institutional investor interest, support our upside forecast for the big picture. In the short term, given the nature of the market and pricing behaviors, we think it would not be surprising to see occasional pause or pullbacks in digital assets. However, at this point, it is worth underlining again that we think the fundamental dynamics continue to be bullish.
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