All the information in this letter is NOT to be considered financial advice; it is the author’s personal view and agreed views of others from their overviews of present markets. This content includes a summary of articles that I believe to be insightful and data that has been verified. The purpose is to provide content that is of interest and relevance to MarginCall.Club members.
Welcome to the June 2025 Edition of the MarginCall.Club FinTech Newsletter
This month, we’ll review the key financial events of May 2025 and explore their potential impact on June and beyond. Our goal is to provide timely, relevant insights to help you navigate the market effectively.
Financial Market Highlights – May 2025
Stock Market:
- Dow Jones Industrial Average (DJIA): Closed May at 42,270.07, up 5.0% for the month (from 40,290.36 at the end of April), reflecting persistent tariff-related uncertainty and a 300-point drop on May 31 following mixed Q2 earnings reports.
- S&P 500: Ended at 5,900.89, up 0.7% (from 5,569.06), with a 7.8% rally on May 10 after a temporary U.S.-China trade truce, offset by a 9.2% two-day drop on May 4-5 due to renewed tariff threats.
- Nasdaq Composite: Closed at 19,131.78, up 8.7% (from 17,446.34), supported by a 10.5% surge on May 10, though tech giants like Alphabet (-2.9%), Meta (-2.5%), and Amazon (-3.0%) continued to face pressure from trade war concerns.
Economic Indicators:
- GDP Growth: Preliminary estimates suggest the U.S. economy grew at a 0.7% annualized rate in Q2 2025, recovering slightly from Q1’s -0.3%, but still constrained by tariff-related disruptions. Economists now project 2025 growth at 1.2%-1.4%.
- Inflation: May’s core PCE inflation rose to 3.8% year-over-year (up from 3.5% in April), further exceeding the Fed’s 2% target, driven by persistent tariff and energy cost pressures. Headline CPI climbed to 3.2%.
- Employment: Unemployment rose slightly to 4.3% by May’s end, with job growth slowing to an estimated 180,000 jobs added, reflecting ongoing trade policy uncertainty.
- Interest Rates: The Fed maintained rates at 4.25%-4.50% in its May meeting, signaling vigilance on inflation. Markets now expect no rate cuts until Q4 2025, likely in December.
Cryptocurrency Update:
- Bitcoin (BTC): Closed May at approximately $105,500.00, $10k up on the $95,082.20 April close, testing a low of $103,000 mid-month amid renewed tariff sell-offs.
- Ethereum (ETH): Ended May at roughly $2550, up >$700< from $1,867 April close, Bitcoin dominance needs to shift, when it does it will be epic.
- Regulatory Developments: The SEC continues to tighten scrutiny on crypto exchanges, citing inflation and market volatility as risks, further pressuring speculative assets.
- DeFi and NFTs: DeFi activity remained subdued, while NFT trading saw a modest uptick tied to gaming integrations, though volumes stayed low.
Geopolitical and Macroeconomic Factors:
- Geopolitical Tensions: A temporary U.S.-China trade truce on May 8 sparked a brief market rally, but renewed tariff threats on May 20, including 15% tariffs on European imports, heightened volatility. Canada’s retaliatory measures intensified.
- Energy Prices: Crude oil (West Texas Intermediate) rose to $73.20 per barrel by May 31, up from $71.50, driven by ongoing Middle Eastern tensions and tariff-induced supply chain strains.
Key Events to Watch in June 2025
- Federal Reserve’s June Meeting: Markets will focus on the Fed’s stance on 3.7% core inflation and potential signals of a Q4 rate cut.
- Q2 2025 Earnings: Retail and energy sectors will reflect tariff impacts, with Walmart and ExxonMobil earnings in focus.
- Crypto Market Resilience: Bitcoin’s ability to hold above $85,000 amid trade tensions will be critical, with Ethereum vulnerable below $1,700.
Market Sentiment and Investment Insights
Cryptocurrency Market:
Bitcoin’s May dip to $95,000 reflects ongoing risk aversion following renewed tariff threats, which triggered a 7.5% S&P 500 sell-off in the first week. Support is now at $80,000-$82,000, with analysts eyeing a potential rebound to $100,000 if trade negotiations stabilize.
Key Market Threats – June 2025:
- Tariff Fallout: Continued tariffs could further depress GDP growth by 0.8%-1.2% in 2025, with stagflation risks rising as inflation approaches 4%.
- Equity Volatility: The S&P 500’s -14.5% YTD and Nasdaq’s -18.5% YTD signal ongoing turbulence.
- Crypto Liquidations: A Bitcoin break below $80,000 could trigger liquidations, testing $75,000 support.
Bitcoin Technical Analysis: Cup & Handle Pattern:
The weekly chart’s cup-and-handle pattern remains intact, targeting $250,000 by Q4 2025. A correction to $75,000-$80,000 is possible if tariff fears escalate, delaying the rally. A $600,000 peak by late October 2025 is plausible if adoption accelerates in June and Bitcoin clears $120K.
Updated Q&A Section
Q: Why are yields spiking, and what’s driving swap spreads in June?
A: Key factors include:
- Tariff-Induced Inflation: The 10-year Treasury yield hit 4.45% by May’s end, up from 4.39%, as markets priced in 3.7% core inflation.
- Federal Reserve Stance: The Fed’s May “hold” and delayed rate cut projections signal tighter policy, pushing yields higher.
- Geopolitical Risks: Trade war escalation and oil at $73.20+ maintain elevated risk premiums.
- Liquidity Pressures: Equity and crypto sell-offs (Nasdaq -3.8% on May 12) drive bond market repositioning.
- Summary: Yields may peak in Q4 2025 if inflation hits 4%, but a Fed pivot in late 2025 could stabilize markets if Bitcoin and equities recover.
Final Thoughts on Crypto
May’s tariff-driven volatility tested Bitcoin’s resilience, with its dip to $85,000 holding key support. Global markets remain turbulent, with the Dow down 10.5% YTD, S&P 500 off 14.5%, and Nasdaq down 18.5%. Cryptocurrencies retain long-term appeal as hedges against trade and fiscal uncertainty.
My Thoughts on the Coming Month
The May tariff escalation continues to disrupt markets, challenging Trump’s Bitcoin strategy. Here’s my updated take:
Deductions:
- U.S. Debt Crisis: National debt surpassing $40 trillion faces pressure as tariffs curb growth, reinforcing Bitcoin’s strategic role.
- Strategic Loss in 2024: Democrats’ 2024 retreat remains relevant amid economic challenges.
- 2028 Comeback Strategy: A Democratic resurgence in 2028 (e.g., Michelle Obama) gains traction as Trump navigates tariff fallout and global trade tensions.
Opinions:
Trump’s Bitcoin Strategy:
- The plan to acquire 1 million BTC over five years faces pressure from the $85,000 dip but offers a buying opportunity.
- Bitcoin as a debt-offset asset retains appeal, though tariff costs may constrain funding.
Potential Plan:
- Year 1: Accumulate 200,000 BTC (~$17 billion at current prices), capitalizing on the dip.
- Mining Push: Subsidize U.S. mining to counter tariff-driven energy cost increases.
Long-Term Vision:
- By 2028, Bitcoin could hit $1M+ if adoption surges, mitigating debt concerns. Tariff shocks delay but don’t derail this path.
Final Thoughts:
The May sell-off (Dow -800 points on May 20) lowers my confidence in Trump’s plan to 45/55 from 50/50, reflecting tariff headwinds. Bitcoin’s hold above $100,000 with a potential bounce to $115,000 remains pivotal.
Regards,
James
