MARKET INSIGHT I | TRADTIONAL DIGITAL

March 13, 2025

Market Outlook: Caution Before Opportunity

For those who follow Traditional Digital's insights, we’ve maintained a cautious stance on the broader market since the FOMC’s hawkish pivot in December 2024. Since then, several events have reinforced our defensive positioning:

• Tariff-induced market hysteria sparked uncertainty.

• Elon’s DOGE has led to job losses and a sharp decline in sentiment.

• This broad macro deterioration pressured risk assets, including crypto.

These real-world factors triggered one of the largest crypto outflows in history, creating

short-term liquidity challenges but also setting the stage for a significant opportunity ahead.

Near-Term Headwinds: Clearing the Path for a Rebound

• Quarter-End Redemptions: Following strong Q4 2024 gains, crypto will experience substantial fund redemptions/outflows, as many investors take profits and rebalance.

• U.S. Tax Season (April 15): Historically, during the third year of a crypto bull market, March and April have delivered quite weak crypto prices, as investors take profits and sell assets to cover tax liabilities.

The Fed Pivot: A Shift from Hawkish to Dovish

The hawkish Fed narrative is fading fast, and monetary policy shifts could soon provide a major tailwind:

• March FOMC (March 19): Likely to announce the end of QT in May, possibly hinting at rate cuts ahead.

• April: there is no April FOMC meeting, so there is a void here.

• May FOMC: QT officially ends (or tapers further), and rate cuts possibly begin.

• June FOMC: Rate cuts begin. 

We expect the Fed to lower rates by at least 1% through sequential 25bp cuts (with a risk of more cuts if inflation comes lower faster than currently anticipated). With no April FOMC meeting, the macro catalysts could align as early as March or may require waiting until May/June FOMC for confirmation.

Regulatory & Policy Tailwinds: A Changing Landscape

Beyond macro factors, significant regulatory shifts are quietly reshaping the digital asset ecosystem, setting the stage for improved capital in-flows and general “mainstreaming” of the asset class:

• SAB121 Rescinded – Previously, SAB121 required an entity to recognize a liability and corresponding asset for its obligation to safeguard crypto assets.

• Comptroller of the Currency Updates – National banks and federal savings associations are now permitted to custody crypto, engage in stablecoin activities, and participate in blockchain networks without additional regulatory burdens.

• IRS Ruling on DeFi Overturned – The U.S. House voted to reject the IRS classification of DeFi platforms as brokers.

These are long-term bullish developments that will unlock institutional participation and accelerate adoption.

Ride the Wave

The short-term headwinds are clearing, setting up a very favorable entry point. Whether our timing is perfect or just highly favorable, launching in April 2025 positions us to capitalize on the market’s next major cycle.

The long-term outlook has never been stronger, and the pace of positive structural change is accelerating. 2025 is shaping up to be an exceptional year for a liquid trading fund—and Traditional Digital is ready to take full advantage.

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This material is for informational purposes only and does not constitute investment, legal, or tax advice, nor an offer or solicitation to buy or sell any securities or financial instruments. The views expressed are based on information believed to be reliable as of the date of publication but may change without notice. Accuracy or completeness is not guaranteed.

Past performance is not indicative of future results, and any forward-looking statements involve risks and uncertainties. Investors should conduct their own research and consult with financial and legal advisors before making any investment decisions. Traditional Digital and its affiliates accept no liability for any losses arising from reliance on this material.