Daily Market Analysis from ForexMart

BTC bull cycle to end soon?

Market sentiment turned bearish, affecting most cryptocurrencies. Bitcoin briefly dropped nearly 6% to $93,890, while smaller tokens saw even sharper declines. Ethereum, the second-largest cryptocurrency by market capitalization, plunged 27% on Monday, February 3, to $2,135. It later rebounded slightly, but experts see this as its largest intraday drop since May 2021.

On the morning of February 3, Ethereum traded near $2,500, while Bitcoin hovered around $93,960. Meanwhile, XRP, associated with Ripple, fell over 15% to $2.20.

Analysts point out that Trump's multi-billion-dollar tariffs on imports from Canada and Mexico will take effect soon, potentially disrupting global trade. He has also threatened to impose tariffs on the European Union. "Trump's tariff war is impacting the whole market," Caroline Bowler, CEO of BTC Markets, said. Concerns over trade conflicts and stagflation, which could trigger a recession, are spreading across altcoins and Bitcoin, she added.

Given these developments, experts believe Bitcoin's bull market could be nearing its end. Although weaker than previous cycles, the current one shows similarities to the 2015–2018 period, leaving room for further growth. According to Glassnode analysts, this Bitcoin rally is marked by a slowdown in price momentum. If Bitcoin reaches a new all-time high and attracts fresh investors, its bull phase could conclude soon.

These market fluctuations mark a sharp reversal after the recent rally fueled by Trump's pro-crypto stance during his election campaign and after his victory. On January 24, the president signed an executive order to establish a task force that will draft key regulations for US crypto firms within six months. The group will also explore the creation of a national crypto reserve.

Ethereum has dropped more than Bitcoin, Solana, and Ripple. According to Jonathan Yark, a leading trader, this is because the latter assets are expected to be included in the US digital asset reserve. As a result, Ethereum's liquidity has been less resilient than Bitcoin's, making it more vulnerable to volatility, he explained.

Meanwhile, the US Securities and Exchange Commission (SEC) has fast-tracked the approval of a combined spot ETF for Bitcoin and Ethereum by Bitwise. Earlier, the agency gave the green light to similar funds from Hashdex and Franklin Templeton.

Despite optimism about Trump's crypto plans, his tariff announcements triggered a strong sell-off over the weekend as traders hedged against broader macroeconomic risks. However, Bitcoin has weathered the downturn better than smaller tokens, which suggests it may recover successfully, Sean McNulty, head of derivatives at a financial firm, said.

Trade Wars Return: How Traders Can Profit from Market Chaos

In early February, the U.S. stock market faced pressure following the announcement of new import tariffs by President Donald Trump. This decision to impose duties on goods from key trading partners raised concerns among investors about potential negative impacts on the global economy.

As a result, the Dow Jones index dropped by 613 points, which represents a decline of 1.4%. The S&P 500 fell by 1.6%, and the Nasdaq Composite decreased by 1.9%.

The main reason for this significant drop was the fear over the possibility of escalating trade wars. The increased tariffs on imports from China, Mexico, and Canada prompted immediate reactions from these countries.

The Canadian and Mexican governments have announced retaliatory measures, while China plans to file a complaint with the World Trade Organization (WTO). This has raised concerns about a potential slowdown in global trade and a possible rise in inflation in the U.S., which could lead to further tightening of monetary policy by the Federal Reserve.

In response, stock prices of companies dependent on international supply chains have declined. Automakers General Motors and Ford experienced significant losses, as a large portion of their components are sourced from outside the U.S. GM shares fell by 5%, while Ford's shares dropped by 4%.

Amid these growing risks, many investors turned to safe-haven assets. The U.S. dollar strengthened by 0.8%, and WTI crude oil prices rose by 1% due to concerns about potential supply disruptions. Additionally, the cryptocurrency market faced heavy pressure: Bitcoin plummeted from $102,000 to $95,000, while Ethereum decreased by 12%.

Despite the panic, some experts believe that these tariff measures could be part of Trump's strategy to enhance trade conditions for the U.S. According to analysts at Goldman Sachs, the imposed tariffs are unlikely to have a significant short-term impact on economic growth. However, potential retaliatory actions from trading partners could worsen the situation.

For traders, the current market situation presents new opportunities. Increasing volatility creates a favorable environment for active speculative strategies. Short-term trades on price fluctuations, as well as trading in indices and commodity assets, can lead to substantial profits with the right approach.

In times of instability, reliable trading conditions are particularly important. InstaForex offers competitive commissions and a wide range of instruments, including CFDs on U.S. stocks, along with instant order execution. With no restrictions on deposit sizes and leverage of up to 1:1000, even small investments can generate significant returns.

As uncertainty rises, traders should closely monitor statements from world leaders and actions taken by central banks. The political landscape will continue to impact markets, but within this turbulence lie excellent profit opportunities. The key is to have a clear trading plan and to utilize reliable tools to minimize risks.

"Golden" Peaks: The Shine of Gold Continues

Gold has once again delighted its investors by reaching a new record high. The precious metal is benefitting from the tense geopolitical climate caused by the ongoing trade tensions between the U.S. and other countries.

The precious metal is actively attracting investment as people seek safe assets amid renewed worries of a trade war between the U.S. and China. Expectations of a Federal Reserve rate cut are undermining the dollar, which adds further support to the XAU/USD pair. This environment is fueling gold's momentum as its price continues to rise.

On Tuesday, February 4, the price of gold reached a record high once again. This upward trend is largely driven by investors' desire to acquire defensive assets following China's decision to impose tariffs on U.S. imports—a measure taken in response to tariffs implemented by President Donald Trump. In this context, the price of gold climbed to $2,843.56 per ounce. Bob Haberkorn, senior market strategist at RJO Futures, stated, "The dollar has risen at the start of the week, but further weakness is definitely helping to push the yellow metal higher."

On Wednesday, February 5, gold continued its ascent, reaching a new all-time high of $2,854 per ounce. The bullish trend for gold remains uninterrupted as investors continue to seek refuge in safe haven assets. Later, the precious metal climbed to $2,864 per ounce and showed no signs of retreating.

According to technical charts, the Relative Strength Index (RSI) for gold indicates slight overbought conditions, warranting caution from bullish traders. The recent breakout above $2,800 suggests that the path of least resistance for gold is upward, supporting the precious metal's bullish trend from its December 2024 lows.

However, any corrective decline in gold is expected to find support near $2,830 before reaching $2,800. Further price drops may be seen as buying opportunities but are likely to be limited around the horizontal resistance level of $2,773 to $2,772. A significant breakdown below this range could trigger technical sell-offs, leading to further losses.

Investors are concerned about the negative economic consequences of President Trump's trade tariffs in the current environment. This has fueled the demand for safe-haven assets. Additionally, JOLTS data released on Tuesday, February 4, became another headache for market participants. The latest reports indicate a slowdown in the U.S. labor market momentum, potentially forcing the Federal Reserve to continue its easing cycle despite persistent inflation. This serves as an additional factor driving capital into gold.

The Job Openings and Labor Turnover Survey (JOLTS), published by the U.S. Bureau of Labor Statistics, showed that job openings in December totaled 7.6 million, significantly lower than the 8.09 million recorded in the previous month. These figures highlight a slowdown in the U.S. labor market, nudging the Fed towards further rate cuts. This keeps dollar bulls on the defensive near weekly lows and is another factor favoring the XAU/USD pair.

Expectations of continued Fed policy easing are keeping the greenback near the weekly low reached on Tuesday, February 4, providing additional support to gold prices. However, Trump's decision to postpone tariffs against Canada and Mexico is sustaining risk appetite and may limit gold's growth due to its overbought status. Experts recommend waiting for short-term consolidation or a slight pullback before placing new bullish bets on gold in this situation.

The tariff conflict between Beijing and Washington significantly influences the dynamics of gold prices. Currently, China has responded to Donald Trump's new tariffs by implementing targeted tariffs on imports from the United States. This retaliation has heightened concerns about the escalation of the trade war between the two largest economies in the world. The situation has intensified, even though Trump has offered concessions to Mexico and Canada. As a result, gold has benefited from this conflict, reaching a new record high.

Representatives from the Federal Reserve warn that the new White House administration's plans regarding trade tariffs pose a risk of inflation. They indicated that uncertainty surrounding price forecasts necessitates a slower reduction in interest rates than would have been the case without the trade war.

Market participants are focused on the upcoming U.S. employment data, particularly the Nonfarm Payrolls (NFP) report. This key labor market report is due on Friday, February 7. Moreover, market volatility remains high due to the ongoing tariff confrontation.

According to Jim Wyckoff, Senior Analyst at Kitco Metals, given the current U.S. administration's "disruptive nature," which is creating market uncertainty and the potential for increased central bank gold purchases, gold prices could reach $3,000 per ounce this year. This forecast doesn't seem far-fetched, as gold is traditionally considered a hedge against inflation and geopolitical uncertainty. Large-scale gold purchases contribute to rising prices. However, experts add that higher interest rates reduce the appeal of the precious metal compared to bonds or stocks.