Key Points:
- Crypto markets swung sharply, with Trump’s Crypto Strategic Reserve assets rising 20% before dropping 18% following new U.S. trade tariffs.
- Stablecoin supply surpassed $225 billion, with increased institutional adoption and discussions on cross-border payments at ETH Denver.
The cryptocurrency market faced intense volatility this week following the implementation of new U.S. trade tariffs and continued reaction to President Donald Trump’s announcement of a U.S. Crypto Strategic Reserve.
Digital assets initially surged after Trump’s statement, with assets included in the proposed reserve—Bitcoin, Ethereum, XRP, Solana, and Cardano—rising by as much as 20%. However, market sentiment quickly reversed, leading to an 18% decline the following day.
The sudden market swings reflected broader uncertainty across financial markets. Traditional equities also faced downward pressure as investors reacted to the tariffs, which are set to take effect on Tuesday. The instability extended to risk-on assets, with Bitcoin dropping sharply, further contributing to liquidations across the crypto market.
Gold Outperforms as Risk Assets Struggle
Over the past year, gold has remained one of the strongest-performing assets, showing resilience in a period marked by economic and political uncertainty.
While Bitcoin has often been considered a potential hedge against traditional market fluctuations, its recent performance suggests it has not yet fully transitioned into a risk-off asset. Instead, Bitcoin and other cryptocurrencies have continued to move in line with broader market sentiment, experiencing sell-offs alongside traditional equities.
Despite the overall downturn, some segments of the market showed signs of relative strength.
The real-world asset (RWA) sector, led by blockchain projects like MANTRA, demonstrated stability even as other digital assets saw steep declines.
DeFi Trading Volumes Decline, but Institutional Holdings Show Stability
In the decentralized finance (DeFi) sector, trading volumes have seen a decline following the hype surrounding memecoins earlier in the year. On March 2, decentralized exchanges recorded a combined $11 billion in trading volume, with $3.5 billion in perpetual contracts and $6.5 billion in spot trades. While these figures remain substantial, they indicate a slowdown from previous highs.
The difference in valuation between DeFi and fintech also remains notable. Currently, DeFi projects are trading at an average revenue multiple of 2.5x, whereas fintech and centralized exchanges (CEXs) are valued at 5.9x. The discrepancy highlights how fintech firms continue to attract higher valuations, despite growing adoption of decentralized platforms.
Stablecoin Market Expands Despite Market Sell-Off
While digital asset prices have seen increased volatility, the stablecoin market continues to expand. Total stablecoin supply has now surpassed $225 billion, reflecting steady growth in adoption for payments and trading.
Traditional financial institutions are also moving further into the space. Bank of America recently announced plans to launch its own stablecoin, marking a significant development in the banking sector’s approach to digital assets. Additionally, Tether, the issuer of USDT, has appointed a chief financial officer ahead of an expected full audit, a move aimed at increasing transparency and regulatory compliance.
Discussions at ETH Denver last week highlighted the growing role of stablecoins in global finance. Industry leaders focused on how stablecoins are increasingly used for cross-border transactions, foreign exchange swaps, and merchant payments. As stablecoins continue to gain adoption, they are playing an increasing role in bridging traditional finance with digital asset markets.
