Balancing a Tailored Profit Portfolio: The 3 Risk Profiles

Bitcoin is back on the move….but for how long?

US tariffs have been the talk of the town for some time now and have had a significant impact on the S&P 500 and crypto alike. Trump has named April 2nd ‘Liberation Day’, where he will come out with updates on the tariff situation.

A simple breakdown of what different outcomes may mean for crypto…

1. Positive Case: Tariff Reduction or Breaks Leading to Economic Stabilisation

In this scenario, the tariffs are reduced or eliminated, leading to a positive economic environment. Here’s how it would play out:

Economic Implications:

• Easing of Trade Tensions: A de-escalation of tariffs could foster global trade relationships, boosting economic activity, reducing uncertainty, and encouraging international cooperation. The positive sentiment from easing trade wars would likely translate into higher confidence in the global economy.
  

• Economic Growth: With tariffs lowered, the cost of goods could drop, which might stimulate consumer spending, business investment, and overall economic growth. This would likely stabilise or increase investor risk appetite across both traditional and crypto markets.
  

Impact on Crypto:

• Increased Risk Appetite: A more stable global economy would encourage risk-on behavior from investors. When the global outlook improves, investors may look for higher returns in emerging markets or riskier assets, including crypto. This could lead to increased demand for cryptocurrencies like Bitcoin and Ethereum.
  

• Growth in Crypto Adoption: A stable economic environment often correlates with higher levels of institutional involvement and regulatory clarity in the crypto market, which could boost long-term adoption. As financial markets become more stable, larger institutions and governments might be more willing to explore blockchain technology and crypto adoption.
  

• Bitcoin as a Hedge: With less economic uncertainty, Bitcoin may be less of a "safe-haven" asset. However, the overall shift to more risk-positive sentiment could bring increased demand for innovation-driven cryptos such as those involved in DeFi, NFTs, or layer-2 scaling solutions.
  

2. Neutral Case: Minor Tariff Adjustments with Mixed Impact

In this scenario, tariff discussions result in minor adjustments—either small reductions or only symbolic changes—without significantly altering the broader economic environment.

Economic Implications:

• Limited Economic Effect: Minor tariff reductions or adjustments wouldn't drastically alter the global trade landscape. While businesses might experience some relief, the overall economic impact could be limited or balanced out by other geopolitical risks, regulatory concerns, or supply chain disruptions.
  

• Market Uncertainty Remains: The economic environment remains somewhat uncertain, and investors might continue to be cautious about both traditional and digital assets, as tariffs alone wouldn’t resolve the underlying global trade concerns.
  

Impact on Crypto:

• Mixed Sentiment in Crypto Markets: In a neutral environment, the crypto market would likely experience a mixed response. Some investors might see minor tariff adjustments as a sign of economic stabilisation, which could bring in more institutional capital or investor interest in crypto projects with solid fundamentals.
  

• Speculative Opportunities: While the impact would be limited, some traders could still take speculative positions on risky altcoins or smaller projects, anticipating that minor positive news could drive short-term price moves.
  

• Continued Volatility: The mixed sentiment could mean that crypto markets would remain volatile in the short-to-medium term, driven by global news, regulatory changes, or shifts in investor sentiment, without a clear, consistent direction.
  

3. Negative Case: Increased Tariffs or Escalating Trade Wars Leading to Economic Downturn

In this scenario, the U.S. (or other major economies) enacts new tariffs or escalates existing ones, leading to economic strain and trade tensions. This could be a negative economic environment for crypto and traditional markets.

Economic Implications:

• Heightened Uncertainty and Slowdown: The imposition of additional tariffs or trade barriers could escalate geopolitical tensions, resulting in a global economic slowdown. Rising prices, supply chain disruptions, and potential retaliatory tariffs from other countries could put pressure on business profits and consumer spending.
  

• Inflationary Pressures: Increased tariffs often lead to higher consumer prices for imported goods, which could cause inflationary pressures in certain sectors, potentially harming economic growth and consumer confidence.
  

Impact on Crypto:

• Flight to Safe-Haven Assets: In this scenario, investors would likely move toward safe-haven assets to protect their capital from geopolitical or financial risk. Bitcoin and other cryptocurrencies could be viewed as safe-haven assets, particularly for investors looking for protection against inflation or currency devaluation. Watch for USD strength here to ascertain Bitcoins direction.
  

• Increased Volatility in Crypto Markets: The crypto market, being inherently volatile, could experience increased price swings as news of tariffs and economic downturns fuel investor reactions. Bitcoin might surge as a hedge, but altcoins or less-established projects could suffer as investors flee to safer assets.
  

• Regulatory Risk and Institutional Flight: If trade tensions escalate, governments might react by tightening regulations on crypto markets, particularly if they view crypto as a threat to financial stability or as a tool for circumventing economic sanctions. This could lead to institutional caution or withdrawal from the crypto space in the short term.
  

• Global Crypto Adoption Might Slow: In a more protectionist and uncertain global environment, countries may be less likely to embrace cryptocurrencies and blockchain technology, slowing down international cooperation and crypto adoption.

Recent news suggests that Trump may come out with positive to neutral tariff decisions next week, leading to positive price movement, however, I’d expect to see some price swings around decision time to capture liquidity.

He does continue sharing last minute tariff comments in his wildly unpredictable way, such as a 25% tariff on all imported cars…. So expect the unexpected. You can sit on the side of caution with risk to be safe.

Momentum on the daily timeframe for Bitcoin is up. Until we get a clear break of this multi-month downtrend, I am still cautious. A close above the 50 moving average (MA) is the first stop, but a lot more certainty will come back into the market when we are getting daily closes in the high $90’s.

Altcoins have started to make a move and some are shaping up better than others! Let’s have a look at the portfolio breakdowns below.

Before we do… a chart worth sharing. The total market cap dominance of altcoins outside of the Top 10. We are finally seeing a breakout. I am not calling altcoin season, but maybe an easing of some of the vicious pullbacks in 2025!

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