Trakx Weekly Update: Inflation Relief Meets Political Risk

Key Crypto Market Figures

CTIs Weekly Performance

Digital assets ended the week modestly higher. Bitcoin briefly reached two-month highs, helping our flagship large-cap Top 10 Crypto CTI gain nearly 2% over the week. The standout performer was the Gaming CTI, which rallied more than 11%. In contrast, last week’s top performer—the AI CTI—recorded the weakest performance after falling roughly 10% following a sharp correction.

Fed Policy

The release of December US CPI inflation data provided a mid-week boost to digital assets, as the figures suggested price pressures were more contained than expected. Headline inflation remained unchanged at 2.7% year-over-year, while core inflation—which excludes food and energy—came in slightly below expectations at 2.6%. Although inflation remains above the Federal Reserve’s 2% target, the data reinforced expectations that interest rate cuts later this year remain possible.

More pressing for markets, however, is the growing political pressure on the Federal Reserve from the Trump administration. As noted in our previous weekly report, this led Chair Jerome Powell to issue a highly unusual video statement warning about threats to central bank independence. In response, more than 11 central bank leaders—including those from the ECB, BIS, and Bank of England—published a joint letter expressing “full solidarity” with Powell and emphasizing that central bank independence is critical “to preserving price, financial, and economic stability”. In our view, this escalating tension between fiscal and monetary authorities reflects a shift toward fiscal dominance—a regime that has historically been supportive of finite-supply assets such as gold and Bitcoin and has helped reinvigorate crypto market sentiment.

Legislative Delays

Last Wednesday, the US Supreme Court declined to rule on the legality of President Trump’s global tariffs, which are being challenged in lower courts on the basis that emergency powers were improperly invoked. The case is a significant test of presidential authority, particularly as Trump over the weekend threatened to apply 10% tariffs to pressure Denmark and several other European countries in his bid to acquire Greenland, an announcement that, it is fair to say, did not go down well with European politicians.

If the tariffs are ultimately deemed illegal, hundreds of billions of dollars raised through the policy could be returned to the private sector. Ongoing uncertainty surrounding the Trump tariffs, not to mention the reignition of trade war fears, triggered a bout of risk aversion that hit both digital assets and global equity markets.

Regulatory delays also surfaced in the crypto space. The US Senate Banking Committee postponed the markup of a bipartisan crypto market structure bill designed to clarify regulatory jurisdiction between the CFTC and SEC and establish a federal oversight framework for digital assets. The delay followed Coinbase’s withdrawal of support, citing concerns that the bill contained “too many issues.”

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Bitcoin Hits Two-Month High as CPI Steadies and Short Covering Accelerates: Decrypt
• Global central bankers unite in defense of Fed Chair Jerome Powell: CNBC
• Supreme Court issues no ruling on Trump’s tariffs: YahooFinance
• Crypto majors slide as tariff fears spark risk-off move; gold zooms to record highs: CoinDesk
• US Senate committee delays crypto bill after opposition from Coinbase CEO: Reuters
• Eric Adams’ memecoin team deflects after 82% crash: ‘Our partners had to rebalance the liquidity’: DLNews
• Why crypto should have listened to Dilbert: Protos

Trakx CTIs Performance

Sources: Coingecko and AlphaVantage

*Return of bitcoin is calculated since 01/05/2020, while CTIs performances were calculated since their respective launch date.
**Includes simulated performance.
***The risk signal is determined according to the historical volatility level, the higher the riskier.

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Disclaimers: No Investment Advice. Index returns and statistics are for illustration only. Index returns do not reflect any transaction costs or expenses. Past performance does not guarantee future results. The information provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the newsletter content as such. Trakx.io does not recommend that any cryptocurrency should be bought, sold, or held by you. Readers shall conduct their own due diligence and consult their financial advisors before making any investment decisions.