Original Article Title: "SignalPlus Macro Analysis Special Edition: TACO"

Original Source: SignalPlus

Earlier this month, Robert Armstrong, a columnist for the Financial Times, first introduced the relatively unknown abbreviation "TACO," which stands for Trump Always Chickens Out. The term is meant to mock the president's tendency to back down when faced with tough situations after initially taking a hardline stance. Armstrong suggested that in the face of threats from the Trump administration, opposing countries simply need to "wait it out" to come out unscathed.

When directly questioned about the abbreviation during a White House press conference, TACO started to receive mainstream attention, much to the displeasure of the Trump administration.

Perhaps in response to this mockery, the Trump administration's stance became noticeably more hardened in the latter part of last week, leading to an escalation in U.S.-China tensions:

· Trump accuses China of "blatantly" violating Geneva trade rules

· Deputy Secretary of the Treasury, Bessent, criticizes China for deliberately obstructing the export of rare earth minerals critical to the U.S. supply chain

· Trade Representative Greer accuses China of deliberately delaying approval for rare earth mineral exports

· Beijing retaliates by accusing the U.S. of "abusing" semiconductor export controls

· The U.S. government further expands restrictions on technology licensing in China's tech industry

· The U.S. Department of Commerce restricts the sale of chip design software and certain aircraft engine components to China

· Following the ban on foreign students at Harvard, U.S. Secretary of State Marco Rubio announces plans to revoke Chinese student visas

Overall, the latter part of last week saw a clear shift in the market towards risk aversion. Despite the volatility of both stocks and fixed income returning to cyclical lows, the stock market has yet to reach new highs.

Concerns about runaway bond yields seen earlier have gradually eased, with the 30-year Japanese government bond yield declining in tandem with U.S. bond yields, making it difficult to determine which is leading the other. This further indicates that the recent rise in yields is primarily driven by risk-off behavior in the fixed income market and macroeconomic concerns, rather than specific or structural issues, leading us to be more confident that yields should steadily decline as we move into the summer.

In addition to the daily tariff-related news (which the market has already started to take for granted), the overall market sentiment remains weak. Various assets lack a clear direction, and the market focus may shift to the non-farm payroll report later this week to see if it can continue to move against the weakening survey data and economic growth expectations. Considering the recent softness in employment surveys and initial jobless claims data, coupled with the current high level of the stock market, the short-term risk probably still leans towards the downside.

In the cryptocurrency realm, despite the recent predominantly positive news, price performance remains lackluster. BTC and MSTR have both failed to break through overhead resistance, with most mainstream tokens falling by about 5–10% over the past week.

On a more positive note, Blackrock's IBIT ETF saw a record-high monthly inflow of over $6 billion; meanwhile, the open interest of ETH futures continues to rise along with the price rebound in the first quarter, indicating that new long positions are still entering the market.

In terms of news, Stripe is reportedly in “serious discussions” with traditional banks to use stablecoins for transactions; and Trump Media has raised approximately $2.3 billion through equity and convertible bonds to further allocate to BTC. Additionally, the SEC has formally withdrawn its lawsuit against Binance (and cannot initiate the case again), symbolizing the end of a cryptocurrency era and the beginning of a new era, albeit with more intervention from the traditional financial and political realms.

However, in this positive environment, BTC failed to hold onto its upward channel last week. When the market fails to respond positively to bullish news, it serves as an internal warning signal. Moreover, BTC's recent strength has not been confirmed in cryptocurrency-related stocks; for example, MSTR did not move in sync, and its leveraged ETF saw outflows, showing a significant deviation from the ETF situation of BTC and ETH.

Since the beginning of the year, BTC has outperformed all macro assets, but short-term indicators suggest that the market may face a more challenging phase. OGs and early adopters continue to take profits at highs, while mainstream buyers enter the market. If macro risks heat up again in the summer, will BTC also experience a pullback? Our basic view is that the market may transition to a more subdued phase in the second half of the year, no longer as volatile as in the first half. Wishing you all a successful week of trading, and if possible, please try to avoid highly leveraged BTC positions.

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