Investors are bracing for volatility in February and scrambling to position themselves for a global trade war. Bitcoin is entering one of its strongest months of the year. It’s finished in the green in all but two Februarys since 2013 and has an average return of 14% during the month over that period, according to CoinGlass. It finished January up 9%. This year, investors are entering February with an array of positive news that should give them comfort through any upcoming macro driven volatility. Bitcoin’s price action, however, may not be as upbeat as usual. “A dark cloud in the form of sweeping tariffs has descended over bitcoin and crypto at the start of February, which puts at risk its label as one of bitcoin’s favorite months,” Antoni Trenchev, co-founder of crypto exchange Nexo. Oppenheimer’s Owen Lau said uncertainty about tariffs, which come with inflation risks, could add pressure to bitcoin and Coinbase over the next few weeks. “This may become a prolonged trade war and adds to concern about an economic downturn,” he said. However, “it doesn’t look like it can be resolved in February, so it is likely that the industry will be under pressure for the month.” Bitcoin fell over the weekend after Trump signed an order imposing 25% tariffs on imports from Mexico and Canada, as well as a 10% duty on goods from China, but it recouped some of those losses once the U.S. agreed Monday to pause duties on Mexico and Canada. “Further chop can’t be ruled out in this uncertain geopolitical environment, and we won’t be able to say that bitcoin has moved through that fogginess until it clears $110,000,” Trenchev said. “A reticent Federal Reserve is another reason not to throw caution to the wind as we parse each piece of economic data over the next six weeks ahead of the next FOMC meeting.” “Crypto investors should sit back and take stock of the plethora of positive news that crypto enjoyed in January,” he added. “The industry didn’t get everything it wanted (e.g. a Strategic Bitcoin Reserve) but we now reside in a crypto friendly environment in the U.S. and that opens the door to innovation, regulatory clarity and a favorable price backdrop.” Last month, former Securities and Exchange Commission chair Gary Gensler left his post and President Donald Trump tapped Commissioner Mark Uyeda, a crypto industry ally, as interim chair until Paul Atkins is confirmed to the role. Uyeda will be leading a crypto task force to develop clear industry regulations. The SEC also repealed the SAB 121 accounting rule, which required financial institutions to treat cryptocurrencies as a liability on their balance sheets. And finally, Trump signed an executive order on crypto, with parameters for how the industry can continue to operate and flourish in the U.S. Four days into the new month, Trump has signed another executive order outlining plans for a government-run sovereign wealth fund, which crypto enthusiasts are speculating would be the kind of fund that could house the government’s confiscated cryptocurrency holdings. On Tuesday, Republican Senator Bill Hagerty of Tennessee proposed new rules for stablecoins. This afternoon, crypto and AI czar David Sacks is holding a press conference where he’s expected to reveal several crypto-related plans and developments. Grayscale head of research Zach Pandl acknowledged that there is some industry disappointment in Trump’s executive order on crypto, which called for planning around a strategic bitcoin reserve rather than outright launching one. Outside of that topic, however, the order gave the industry all the clarity it needed to be confident that the Trump administration is going to support crypto development in the U.S., he said. “The market has not fully reacted to the executive order and its implications for the industry,” Pandl said. “So in February, I would expect the longer run implications of Trump’s executive order to sink in for crypto investors and potentially get new investors to deploy capital in the asset.” Still, he warned, higher tariffs and uncertainty about AI valuations could weigh on the equity market “for some time,” which could pull down cryptocurrency prices. “Investors are likely to reduce risk across the board, including in crypto,” he said. “However, bitcoin is a global asset and not directly affected by higher tariffs. Moreover, extensive use of tariffs could further fragment the dollar-based global financial system, possibly leading trading partners to seek alternative money and payment systems.”
