Open Range | April 6th, 2025 | Tariffs Galore, Bitcoin Sells Off

Tariffs dominated the headlines of the week, as the Trump administration blanketed other countries with "reciprocal" tariffs. Markets reacted very negatively to the tariffs due to inflation and recession concerns. Meanwhile, bitcoin sold off less than anticipated amid the broader market turbulence, setting the asset up for strength when the equity markets eventually bounce back, while hash rate reached new all time highs.

Bitcoin & Macro Update

Equity markets sharply sold off, with Thursday as the 29th worst trading day in the stock market history following tariff news. Meanwhile, bonds caught a bit, with the US 10 year yield jumping over 30 bps during the week, and briefly falling below 3.9%. This seems to be in line with the goals of the administration problem, given repeated quotes of “needing to get interest rates down”, and the equity market selloff being a “mag 7 problem, not a MAGA problem.”

On Tuesday, April 2, 2025, President Donald Trump announced new tariffs of at least 10% across all countries. For those countries that had “tariffs” against the US, the President imposed a tariff of half the existing tariff on the US. However, the tariff calculated by another country against the US was actually just a trade deficit formula for goods cut in half for simplicity purposes.

Many pundits anticipated the dollar to strengthen following the news due to lower expected fewer purchases of overseas goods and narrower trade deficits, causing weaker US demand for foreign exchange. However, the US dollar crashed, with an article from the WSJ offering a potential rationale “Focusing too much on trade deficits overlooks the fact that the competitiveness and profitability of American tradable products have played a key role in determining the dollar’s value. Right now, they are coming into question.”

The ISM Services Purchasing Managers Index (PMI) Declined sharply in March, showing softer economic activity, the weakest since June of last year, due to waning consumer confidence and tariff uncertainty.

Layoffs across the U.S. surged 205% in March when compared with a year earlier, with last month's 275,240 job cuts fueled by widespread firings, primarily across the Federal Government, with a reported 216,000 government employees fired. However, initial jobless claims data declined through the last week of March, suggesting the full impact of the firings were primarily limited to the Federal Government.

Data from the Bureau of Labor Statistics showed 7.57 million jobs open at the end of February, a decrease from the 7.76 million seen in January. Job openings in February remained near a level last seen in early 2021 and marked the lowest level since last September.

Network Update

Hash rate reached a new all time high this week, showing that even though bitcoin on-chain fees are extremely low and bitcoin prices have declined over the past few months, bitcoin’s security is stronger than ever.

 Meanwhile, over the past week, bitcoin reached the available supply of 94.5% of all bitcoin ever to exist has been mined. That leaves the last 5.5% to be mined over the next 115 years.

Regulatory Update

The past week was relatively quiet on the regulatory front. However, a number of bitcoin strategic reserve bills at the state level remain active and continue to progress.

Institutional Update

In Blackrock’s annual shareholder letter, Larry Fink discussed the U.S. federal debt problem, and how it could lead to the loss of dollar reserve status. “The U.S. has benefited from the dollar serving as the world’s reserve currency for decades. But that’s not guaranteed to last forever…If the U.S. doesn’t get its debt under control, if deficits keep ballooning, America risks losing that position to digital assets like Bitcoin.” 

Fidelity’s Investments rolled out an IRA plan that directly offers bitcoin exposure with no fees, and customers can invest in a Roth IRA, traditional IRA or rollover IRA, according to Fidelity's website. 

Strategy acquired 2,048 bitcoin for ~$1.92 billion, bringing their total holdings to 528,185 bitcoin. Metaplanet also had a busy week, buying 856 bitcoin, which increased their total holdings over 25% to 4,206 bitcoin. 

Meanwhile, Cango Inc, a Chinese publicly traded company, entered into plans to sell their auto business for $350m, with plans to buy bitcoin with the proceeds.

Spotlight: BitBonds

Bitcoin-Enhanced Treasury Bonds: An Idea Whose Time Has Come 

This piece co-authored by Andrew Hohns and Matthew Pines lays out the case for Bit-Bonds, a proposed financial instrument where 10% of bond proceeds are used to buy Bitcoin for a Strategic Reserve, offering investors a lower interest rate plus a share of Bitcoin appreciation, designed to cut U.S. government borrowing costs and  offset federal debt.

The team also understood the need to securely store private key material: "As a bearer asset, bitcoin can be lost if private keys are compromised or destroyed. The program addresses these custody and security challenges through a comprehensive security framework. 

The framework includes implementing multi-institutional, multi-signature custody solutions that distribute control across trusted entities, preventing single points of failure. Geographic distribution of storage facilities would enhance physical security and operational resilience. Cold storage would be employed for the vast majority of holdings, with minimal hot wallet exposure for operational needs." 

The authors understand that improper bitcoin private key management has resulted in $600B in losses from exchange hacks, fraud, user error, or physically lost. 

Multi-Institution Custody is the natural next step to reduce private key material risk. The best security setup is being demanded by nation states, individuals, and corporations, and will become the standard in bitcoin custody over the next few years. 

The market is increasingly recognizing the need to hold bitcoin in the most secure way possible and Early Riders is thrilled to invest in the companies bringing MIC to individuals, corporates, and the rest of the world.

Early Riders Media

Are Bitcoin Treasury Companies the New Altcoin ICOs?