Trade War Cools

Key Takeaways

• Trade war de-escalation fuels risk-on rally in legacy indices as Bitcoin holds the $100k level
• Trading sentiment for digital assets remains muted as measured by funding rates
• Memecoins surged last week after significant multi-month drawdowns since December

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Digital Asset Commentary

Fears over the trade war have eased following weekend talks in Geneva between Treasury Secretary Bessant and a Chinese trade delegation. In response, major stock indices surged, gold sharply retreated from recent highs, and the U.S. Dollar Index (DXY) climbed back above the 100 mark.

Bitcoin has remained resilient amid broader macro uncertainty, reclaiming and holding above the $100,000 level. However, the mood around this breakout is noticeably more subdued compared to the initial surge past $100k in December last year. Ethereum also showed strong momentum last week, gaining 40%. Despite these price moves, sentiment in derivatives markets remains cautious: futures funding rates and open interest (OI) for both BTC and ETH on crypto-native exchanges are still relatively low.

Bitfinex’s BTC open interest, historically a reliable directional signal, has declined by 15% since the late April breakout, suggesting selling into strength. Meanwhile, the premium on CME BTC futures is just one-fifth of what it was the last time BTC traded above $100k. CME Commitment of Traders data shows commercial traders, primarily miners, are currently holding their largest long positions ever, a historically bullish sign. Last week, BTC ETFs saw significant inflows totaling $921 billion, while ETH ETFs experienced slightly negative net flows.

The top performers last week were high-beta memecoins, signaling a resurgence of retail-driven euphoria. Many of these tokens had previously retraced 60–80% from their December highs and have now recovered roughly half of those losses. However, this altcoin rally hasn’t been accompanied by a corresponding surge in stablecoin issuance, a common pattern in past retail-driven market runs. Despite USDT & USDC reaching a combined record of $211 billion in circulation, no additional issuance occurred over the weekend. Meanwhile, a proposed U.S. Senate bill aimed at establishing the first regulatory framework for stablecoins failed to advance last week.