Dormant Ethereum Whales Shift $400M to Bitfinex Before ETH’s 20% Drop

The Bitcoin price sank by more than 13.5% over the weekend, dropping as low as $91,201 on Binance. The sell-off followed US President Donald Trump’s announcement of new trade tariffs. The administration levied a 25% tariff on most imports from Canada and Mexico, added a 10% tax on Chinese goods, and imposed a 10% tariff on Canadian energy resources.

While market observers typically view such aggressive moves as a negative for risk assets, one prominent voice at Bitwise Invest sees a wildly different scenario, predicting that these tariffs could fuel a “violent” long-term rally in Bitcoin.

Why Tariffs May Supercharge Bitcoin

Jeff Park, Head of Alpha Strategies at Bitwise Invest, argues that these tariffs cannot be understood simply as a response to trade imbalances but should be viewed against the broader backdrop of the so-called Triffin dilemma. In Park’s words, “The US wants to keep its ability to borrow cheaply, but rid its structural overvaluation and constant trade deficits—enter tariffs.”

He suggests that, by using tariffs as a bargaining chip, the White House is looking to create a new multi-lateral agreement—akin to a “Plaza Accord 2.0”—aimed at weakening the US dollar. This would potentially oblige foreign governments to reduce their US dollar reserves or to hold longer-duration Treasuries, thereby keeping yields low without officially enacting yield curve control.

Park also ties this strategy to the president’s personal incentives. He believes Trump’s “#1 goal” is to drive down the 10-year Treasury yield, in part because cheaper long-term financing would benefit real estate markets. According to Park, such a push for lower yields dovetails with a deliberate move to weaken the dollar—two conditions that, in his view, create a perfect environment for Bitcoin to flourish.

“The asset to own therefore is Bitcoin. In a world of weaker dollar and weaker US rates, something broken pundits will tell you is impossible (because they can’t model statecraft), risk assets in the US will fly through the roof beyond your wildest imagination, for it is likely a giant tax cut will have to accompany the higher costs borne by the loss of comparative advantage,” Park writes.

His thesis is that the “online and onchain” nature of today’s economy will funnel frustrated citizens across the globe toward alternative stores of value—namely Bitcoin. He believes both sides of any prolonged tariff war will discover that BTC offers a refuge from the fallout, leading to what he describes as a much higher price trajectory.

“So while both sides of the trade imbalance equation will want Bitcoin for two different reasons, the end result is the same: higher, violently faster—for we are at war. TLDR: You simply have not yet grasped how amazing a sustained tariff war is going to be for Bitcoin in the long run,” Park claims. Tariffs As A Risk Asset Drag

Not all analysts share Park’s optimism. Alex Krüger, an economist and trader from Argentina, disagrees with the notion that tariffs of this magnitude inherently favor Bitcoin. He warned that “Bitcoin is mainly a risk asset.”

He added: Tariffs this aggressive are very negative for risk assets. And the economy will take a hit. The tariffs announced are considerably worse than what was expected by the market, as gradual tariffs or delayed implementation were seen as alternatives. So the S&P futures will open deeply in the red tonight and flush.”

In Krüger’s view, Bitcoin remains a high-beta asset often correlated with equity markets. When a major macro shock—like a sudden hike in tariffs—hits, investors typically rotate into safe havens rather than riskier holdings such as stocks or cryptocurrencies. He pointed out that the sell-off in crypto over the weekend might be explained by the market reacting to an “unexpectedly harsh” tariff announcement.

“The hope for crypto is that it has already dropped a lot in anticipation,” Krüger observed, hinting that digital assets may find a local bottom if the initial shock has been fully absorbed. However, he emphasized the persistent uncertainty ahead, including the possibility of retaliation by targeted nations. A swift resolution to the trade dispute could trigger a bounce, whereas an escalation could deepen market jitters.

Krüger also cautioned that the Federal Reserve might turn hawkish if tariffs stoke inflation—an outcome that rarely bodes well for high-growth or risk-prone assets. Still, he hasn’t ruled out fresh all-time highs in equities later this year:

“I still don’t think the cycle top is in, and expect equity indices to print ATHs later in the year. But the probability of being wrong has increased. Particularly on the latter. As I said a week ago, I’ve taken my long-term hat off. This is a traders’ market.”

At press time, BTC traded at $94,000.

Thailand’s securities regulator is looking to develop a blockchain-based platform for securities firms to trade debentures via digital tokens, the Bangkok Post reported Monday.

Jomkwan Kongsakul, deputy secretary-general of the Thai Securities and Exchange Commission, said that a successful implementation of the platform is expected to raise efficiency in the local capital market by removing existing hurdles, according to the report.

The SEC official said that purchasing bonds from the primary market takes up to 14 days before they can be traded in the secondary market, causing inefficiencies. Bond issuers, on the other hand, are required to process large amounts of manual data which causes delays.

“In the future, new regulations will be launched to facilitate the issuance of electronic securities and online purchases of debentures,” Kongsakul said.

The Thai SEC intends to fully digitalize the local bond trading system, covering settlement, trading, investor registration and return payments for both primary and secondary markets, according to the Bangkok Post.

Digital securities in Thailand are planned to be issued in two types — traditional products that are digitalized for the trading platform and electronic securities created on the newly planned platform.

The agency has already approved four digital token projects and is currently reviewing two more, while five other parties have engaged in preliminary discussions with the SEC, the report said.

Meanwhile, the SEC official reportedly said that the regulator plans to allow firms in the private sector to develop their own independent chains, given that they adhere to a unified standard provided by the SEC.

"In the future, there may be multiple chains for trade. Trading through DLT on all systems is connected by a shared ledger, which is expected to be completed soon," Kongkasul said in the report.

The Block reached out to the Thai SEC for further comment.

Last month, the Thai SEC was reportedly considering the approval of bitcoin exchange-traded funds on local exchanges to keep pace with the global trend. This follows the agency’s launch of a regulatory sandbox for cryptocurrency businesses in August last year.

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© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Jeff Park, Head of Alpha Strategies at Bitwise Asset Management, stated that a prolonged tariff war could have a substantial positive impact on Bitcoin over time.

Over the weekend, President Donald Trump imposed tariffs on Canada, Mexico, and China.

Tariff War: Good for Bitcoin?

President Trump has imposed a 25% tariff on imports from Canada and Mexico. Additionally, a 10% tariff on Chinese goods and a 10% tariff on Canadian energy resources are implemented. According to the BBC, Canada and Mexico have also announced plans to impose retaliatory tariffs.

In a recent post on X, Park outlined the Triffin dilemma and President Trump’s personal objectives to explain Bitcoin’s long-term rise.

Park elaborated that the Triffin dilemma stems from the US dollar’s status as the world’s reserve currency, granting it an “exorbitant privilege.” This privilege results in three structural effects: an overvalued dollar, a persistent trade deficit, and lower borrowing costs for the US government.

While the US benefits from cheaper borrowing, it seeks to correct the imbalances of an overvalued dollar and continuous trade deficits. Therefore, Park suggests that tariffs are being used as a negotiation tactic to push for a new international agreement. This, he argues, is similar to the 1985 Plaza Accord, aimed at weakening the dollar.

Moreover, Park argues that Trump has a personal stake in this strategy. Given his heavy exposure to real estate, his primary objective is to bring down the 10-year Treasury yield.

In a scenario of a weaker dollar and falling US interest rates, risk assets in the US could surge while foreign economies struggle with rising inflation and currency devaluation. Faced with financial instability, Park predicts global investors will turn to alternative assets.

He emphasized that as economic tensions escalate, Bitcoin’s ascent will accelerate.

President Trump’s Tariffs Spark Crypto Market Collapse

Meanwhile, the threat of a trade war sent the crypto market plunging. Over the past few hours, Bitcoin briefly dropped to a minimum of $91,281, while Ethereum fell as low as $2,143. This has resulted in billions being wiped from the market

According to Coinglass, total liquidations exceeded $2.23 billion within the past 24 hours.

Deutscher added that it was worse than the LUNA and FTX collapses, which saw $1.6 billion in liquidations.

Of the total liquidations, $1.88 billion came from long positions and $349.81 million from short positions. In total, 726,788 traders were liquidated.

Premiums of an infamous bitcoin trade popularized by Sam Bankman-Fried have popped back to significant levels amid a market bloodbath caused by rising U.S. tariffs, a market sign that some consider bearish in the short term.

The so-called Kimchi premium, or the difference in bitcoin prices on Korean exchanges compared to global bourses, rose just over 10% as of Asian morning hours Monday as BTC dropped 6% in the past 24 hours.

The arbitrage involves buying bitcoin on a global exchange and selling it on a Korean exchange for a riskless profit in Korean won. Pocketing the actual gains is difficult due to South Korea's strict capital controls, but the premium is often used alongside other factors to gauge market sentiment.

Trading volumes on Korean exchanges Bithumb and Upbit have dropped significantly in the past week, indicating a drop in retail trading activity. Meanwhile, balances of dollar-margined stablecoin tether have been on the decline on both exchanges with instances of withdrawal delays.

“It seems that most retail investors are either already fully invested in spot or have withdrawn their funds to engage in DEX activities,” Seoul-based DNTV Research analyst Bradley Park told CoinDesk in a Telegram message.

“In this situation, the kimchi premium doesn’t represent retail investors’ overbuying; rather, it appears to have risen as a passive response to the uncertainty of a strong dollar environment,” Park added.

“The kimchi premium can surge excessively when trading volume increases, but it can also help defend prices when the asset prices on overseas exchanges drop significantly," Park said, adding that was likely “not a positive sign” in the short-term for bitcoin.

More than $2.24 billion was liquidated from the cryptocurrency markets in the past 24 hours amid growing geopolitical uncertainties arising from the global tariff war. Ether took the lead, with combined long and short liquidations worth over $609.9 million.

Total daily crypto liquidations on Jan. 3 of over $2.24 billion were shared across more than 730,000 traders. The biggest single liquidation order was recorded on crypto exchange Binance for an ETH/BTC trading pair valued at $25.6 million, according to CoinGlass data.

Biggest crypto exchanges facilitate the liquidation

During the timeframe, 36.8% of all liquidations happened on Binance, owing to its massive user base. Other crypto exchanges sharing the liquidations were OKX, Bybit, Gate.IO and HTX.

Bitcoin starts February down heavily as a wave of fear infects crypto and risk assets thanks to a new US trade war.

• nears $90,000 as a mass crypto sell-off sees altcoin “capitulation wicks” and billions of dollars in liquidations.

• The US trade war wreaks havoc on stock market futures as traders brace for what US President Donald Trump agrees will be “some little pain.”

• The trade war’s impact on the Federal Reserve’s plan for inflation is already on the radar.

• Bitcoin short-term holders see a fresh test of their aggregate cost basis.

• Sentiment collapses as “fear” returns to crypto — the Crypto Fear & Greed Index is down over 30 points in three days.

Altcoin “capitulation” boosts Bitcoin dominance

A sea of red greets crypto traders at the start of February — traditionally one of Bitcoin’s best-performing months.

Data from Cointelegraph Markets Pro and TradingView confirms up to $6,000 of downside on since the weekly close.

The pair hit its lowest levels since Jan. 13, returning to the bottom of a trading range in place since November.