Fortnightly Market Update: When the Storm Hits

The U.S. economy is flashing warning signs left, right and centre: layoffs surging, bankruptcies piling up, credit defaults accelerating and the housing market turning into a seller’s nightmare with buyers vanishing from sight. Scepticism abounds over the latest U.S. employment figures, fueled by a weakening dollar, tumbling 10-year bond yields and credit card debt reaching record highs – not to mention the largest job-number revisions (for 2025) since the Great Recession.

Trump is in mid-term campaign mode touting a $100k Dow Jones by the end of his presidency, but equities are sending desperation signals as they grapple with volatile consumer sentiment, insider selling and government interventions. A stock-market correction feels like the base case over the next few months – not financial advice, just speculation!

Let’s entertain it for a moment. Theoretically, here’s how it could all unfold: a steep correction hits U.S. equities, sparking the predictable blame game. Trump zeros in on Jerome Powell – whose Fed chair term ends in May 2026 – and possibly the Supreme Court too if his tariffs are ruled illegal. The narrative solidifies: overly tight policy, delayed rate cuts, no liquidity rescue. Powell steps aside, Kevin Warsh takes the helm, and easing kicks in.

Warsh has championed yield-curve control to cap long-term yields and unlock cheap borrowing. Liquidity floods the system, lifting asset prices. Layer on potential boosters like the Trump tariff windfall, sweeping tax cuts, and the CLARITY Act overcoming its obstacles. The timing isn’t coincidental. Midterms loom on Nov 3, 2026, with Republicans lagging in betting markets. Trump needs a market jolt to reverse sentiment – because nothing mends voter grudges like portfolios glowing green. And Trump doesn’t like losing!

When liquidity is falling: crypto usually sells off first, followed by equities as risk assets stay weak. And we are in the midst of that right now. The crypto markets have already taken it on the chin! Bitcoin, a leading liquidity indicator known for amplifying market moves with ruthless efficiency, has already plunged nearly 50% from its October 2025 highs. Michael Saylor is looking nervous but he’s not on life support just yet.

Is it about time to declare Bitcoin dead, again?

Not quite – but there is an uncomfortable truth about Bitcoin that needs to be addressed: its 21-million cap is compromised in this era of institutional dominance. Markets now mostly trade on paper BTC rather than the real thing, with Wall Street spinning it into ETFs, perpetuals and futures – as one spot coin quietly underpins multiple synthetic claims. It’s fractional-reserve crypto in sheep’s clothing.

Price discovery has migrated from blockchains to boardrooms, breeding more engineered volatility in its wake. And here we are again, the Fear and Greed Index bouncing along the bottom in “extreme fear”.

A warning to investors: in this era of illusions and mounting chaos, the wise cling to tangible assets that endure – real things that won’t evaporate when the storms hit.

Market sentiment is still grinding in: Extreme Fear

Crypto market moves: 

• On Fri 6 Feb, Bitcoin made its steepest one-day drawdown since the FTX collapse plunging to just below $60k before mounting a recovery rally.
• Risk-off sentiment from tech and AI stocks caused a sell everything moment, sparing only a few privacy coins, exchange tokens and stablecoins from the chaos.
• Total crypto ETF outflows have eased off the heavy selling pressure, down just $173k last week.
• The Fear & Greed Index hit an all-time low of 5 early last week and has remained in Extreme Fear as rumours and FUD circulate on social media.
• Bitcoin weekly RSI is now below 30 and monthly below 50 – bear market levels.
• Polymarket is assigning 8% chance that Bitcoin will reclaim $80k in February and 25% chance it will drop below $60k – traders are still divided on the next move.
• The total crypto market cap has dropped below $2.5 trillion with some green across the top 100 coins as they catch a speculative bid after last week’s lows.
• Just over one third of Altcoins have outperformed Bitcoin in the last 100 days.
• The big winner of the week is MORPHO (Morpho) +31.9% as a cooperation agreement is signed with Wall Street Giant Apollo. 
• The surprise mover of the week is PAXG (Pax Gold) -3.4% as the precious metals trade loses some steam into a consolidation period.
• The big loser of the week is APT (Aptos) -7.2%.

View all top gainers: Visit the top gainers page to find out more.

Highlights from the crypto space

Bitcoin dropped below the prior bull market all-time high, touching just below $60k in a fear driven sell-off as the tech and AI crash worsened. The subsequent bounce back has failed to remain above the $70k level, as we eagerly await the next move to give some indication of direction for the coming weeks and months. The overall market is looking shaky and the VIX volatility index tells us to expect more turbulence.

Bitcoin is about 20% below the estimated $87,000 cost to mine a single coin, as hashrate declines, shrinking margins and profitability to a 14 month low.

Standard Chartered has slashed its Bitcoin price target toward $50,000, saying the crypto markets may not be done correcting just yet. DYOR.

This cycle’s peak-to-trough drawdown is roughly comparable in magnitude to prior cycles with the expected reduction in ROI as time goes on:

BitMine chairman Tom Lee has defended his company’s more than $7.5 billion in unrealized losses by buying more Ethereum. Nothing says conviction like putting your money where your mouth is!

Gemini has announced that it will cease operations in the United Kingdom, Europe and Australia due to stricter regulatory regimes for digital asset firms and to focus on the U.S market and prediction markets opportunity.

U.S. Treasury Secretary Bessent has accused Coinbase of holding up the Crypto Market Structure Bill saying some crypto firms would rather kill the bill than accept stablecoin yield rules, while banks and most of the industry want market structure passed.

Coinbase reported a surprise net loss of $667 million in Q4 2025, breaking the crypto exchange’s eight-quarter win streak. Transaction-related revenue dropped nearly 37% year-on-year to $983 million.

Hong Kong’s central bank is pressing ahead with plans to issue an initial batch of stablecoin licenses in March, despite China’s long-standing opposition to cryptocurrency activity.

Other crypto news

• Korea probes crypto exchange over ghost Bitcoin worth over $40 billion.

• SafeMoon CEO Braden Karony was sentenced to 8 years and 4 months in prison for defrauding investors.

• Pudgy Penguins has teased a cryptocurrency debit card as part of its push into consumer finance.

• Trump-backed World Liberty Financial announced World Swap, a cross-border remittance platform targeting the $7 trillion annual forex market.

• Midnight, a privacy-focused blockchain that utilizes zero-knowledge proofs, will launch as a Cardano partner chain in late March.

• Vitalik Buterin warns prediction markets are over focusing on short-term, dopamine-driven bets and should rather prioritize hedging as the core use case.

• Elon Musk’s X will allow users to trade stocks and crypto within the app in a couple of weeks.

🌎 Macro news TLDR: Between a Rock and a Hard Place

As NZ barrels into another election year, the economy is still trapped in a brutal squeeze… 

Net migration has cratered from its post-COVID peaks that supercharged housing and growth – early recovery signs exist, but nowhere near pre-bubble levels. The housing market is still licking its wounds: in some major centres prices are still down 20-30% from recent highs (not adjusted for inflation), with any boom talk pushed further and further out.

Consumer and business confidence is clawing back, buoyed by a softer NZ dollar and export gains amid Trump’s global trade chaos. Yet the streets tell a darker story: business closures are surging, with business liquidations hitting 15-year highs in 2025 and show no sign of easing.

Inflation’s resurgence, plus the shadow of Labour’s lingering capital gains tax, has investors on edge. The latest CPI hit 3.1% (Dec 2025 QTR), above the RBNZ’s 1-3% target band and hotter than expected. The new governor is laser-focused on caging inflation, but the real culprits aren’t discretionary splurges, its runaway electricity, rates and insurance crushing household budgets.

Westpac economists forecast the OCR climbing to 4% by the end of 2027 (with a peak in early 2028), potentially crushing the ‘green shoots’ through aggressive hikes starting late 2026. But a wild card looms: Japan’s recent election delivered a landslide for PM Takaichi, unleashing big fiscal stimulus with further yen devaluation risks. Trump eyes a weaker US dollar too! Both could hammer export competitiveness for smaller economies like NZ – and raising rates here would only amplify the pain – setting up a high-stakes game of economic chicken for the RBNZ.

To layer on top of all of that is a rapidly aging population, a rising number of net tax beneficiaries (over 50%) and foreign owned banks extracting record year-on-year profits that are amongst the highest % to GDP globally – the drag on growth intensifies. This isn’t a recipe for the rockstar economy we were all promised! 

The challenges are stark. Pulling NZ out of this economic rut demands real political courage, bold long-term reforms and smart navigation – especially if global headwinds from a US-led downturn hit hard.

Economic news from the Americas

The Dow Jones Industrial Average hit a milestone of $50,000 just over one week ago, driven by a post earnings rally in tech and AI stocks.

In a rocky start to the year, U.S. companies laid off 108,000 workers in January, an increase of 205% from the previous month and the highest number in any January since the Great Recession of 2009. 

The payrolls report (that came out a few days later) surprised to the upside reporting an increase of 130,000 jobs in January, above the Dow Jones estimate of 55,000 – but the market was skeptical as an initial rally quickly faded. 

Interestingly, 2025 payrolls have been revised down by over 1 million jobs!

To end a volatile week of trading, major stock indices retreated from record highs ahead of key U.S. inflation data on Friday, as fears of shrinking margins for major tech companies and AI disruption for SaaS companies sparked further risk-off sentiment.

The CPI for January rose 2.4% on a year-on-year basis, lower than the expected 2.5% and 2.7% in December. But still persistently above the target range of 2%.

U.S credit card debt hit $1.28 trillion in January, the highest level recorded in history as the K shaped economy continued to grind on.

Tariff revenue surged in January, up 304% from the same period in 2025 – helping to put a small dent in the pace of the government budget deficit, totalling $95 billion, down about 26% from year-ago. The Supreme Court decision on the legality of Trump’s tariffs is still pending.

Over in Europe & the Middle East…

A letter leaked by Bloomberg suggests Russia is considering a deal with Trump where they will move back to trading in U.S. dollars for a wide range of commodities – and just like that the world is at peace again. One ‘little’ problem, the Russian Central Bank confirmed that they are not onboard with discussions.

Iran is pursuing a second round of nuclear talks with the U.S. that include economic benefits for both sides – proof will be in the pudding!

The U.S. has also called for a new arms control agreement with Russia after the treaty that set caps on strategic nuclear weapons deployments expired. Fingers crossed.

France’s unemployment rate has risen to 7.9% and the highest in 4 years. How the tables have turned, as it may just be ‘the PIGS’ bailing out Western Europe this next time around!

Anger has erupted in the Netherlands over a new unrealised capital gains tax, as the Dutch government approved a 36 per cent tax on the actual returns earned annually from savings and investments. Ouch.

And in Asia Pacific…

Japan’s Prime Minister Sanae Takaichi won the biggest landslide election victory post WW2 with a huge mandate to revitalise the economy, but all eyes are firmly on Japanese bond yields and the yen. There is not much room to run!

The Bank of Japan is expected to hike rates again in April to a 30 year high of 1%. But GDP data has come in weaker than expected at just 0.1% growth for Q4, 2025, undershooting market forecasts of 0.4 percent and just avoiding a technical recession.  

China’s domestic auto market sales dropped 14.8% in January from a year ago, as the industry grappled with a shift in government support policies.

China’s holdings of U.S. Treasuries have fallen to their lowest level in nearly 2 decades as the government reportedly told banks to back off their risk exposure to U.S. assets. The vocalisation of this action could prove to be more about signalling and posturing.

The Australian dollar has surged to a three-year high as investors price in renewed RBA tightening and ride a strengthening Chinese yuan, a powerful combination.

Back in NZ, housing sales and volume were off to a slow start in January, with sales volumes and prices both lower than expected and down 5.4% from January last year. This is likely fueled by growing concerns of rising interest rates and the possibility of capital gains tax if Labour wins the Nov election.

The RBNZ has decided to hold the OCR steady at 2.25% as was expected by most, saying “inflation is expected to be back within our 1-3% target range in the first quarter of 2026. The economy is at an early stage of recovery, and growth is expected to increase over 2026. Any future moves in the Official Cash Rate will depend on how the economy unfolds.”

That’s a wrap for this week!

Please note: as we are now in the midst of our transition to Swyftx, this will be our last fortnightly Market Update newsletter from Easy Crypto – please stay tuned for our first fortnightly Swyftx Market Roundup newsletter on Friday 6 March.

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