Chinese-Canadian Trade Talks, Yen Inflation, and Yet Another Government Shutdown Spook Crypto Markets

Moving in rhythm with global macro-economics, crypto markets have suffered through yet another volatile weekend plagued by trade talks and inflation concerns.

Down 5.69% in the last seven days, $BTC has dragged other crypto majors even lower, with $SOL sliding 8.7% and dipping back below $120.

$SOL ETF flows have remained consistent despite the downturn, recording 13-straight weeks of inflows and suggesting that institutions are still holding the line.

Bitcoin Down 5.69% Macro Tensions Flare

Bitcoin has had a difficult time proving its worth as a stateless, counterparty-free store of value in recent weeks. Long touted as a hedge against geopolitical feuds and macroeconomic turmoil, $BTC is showing considerable weakness amidst trade talks and debasement concerns surrounding both the U.S. Dollar and the Japanese Yen.

Seeking to reduce its reliance on the United States, Canada is currently in the midst of negotiating a trade deal with China, centred around agricultural exports and electric vehicle imports. Unsurprisingly, President Donald Trump has taken issue with the proposed agreement, threatening a 100% tariff on Canada should the deal be finalized.

Despite Trump’s blustering, China’s Foreign Ministry has declared that its trade arrangements with Canada are not aimed at third parties, with spokesman Guo Jiakun arguing that China approaches relations with other countries with “a win-win rather than zero-sum mindset”. 

Prime Minister Mark Carney acknowledged that Canada respects its commitments under the CUSMA (The Canada-United States-Mexico Agreement), and will not pursue a free trade deal with a “non-market economy” like China.

As witnessed in Q2 2025, tariff threats typically sow chaos and disorder into markets, making traders and investors more risk-averse and causing them to exit volatile crypto assets.

Meanwhile, the Bank of Japan has kept interest rates unchanged at 0.75%. The BOJ is keeping a wary eye on the impact boosted inflation could have on the strength of the Yen, which has suffered greatly from the unwinding of the Japanese carry trade. Given the Yen’s historically low interest rate, investors have commonly borrowed the Yen to fund higher-yielding investments.

Some analysts theorize that the FED may intervene in the Yen to stabilize the global economy, similar to the 1985 Plaza Accord, which saw the Dollar index fall by almost 50%.

As if macroeconomic conditions weren’t tense enough, the U.S. Government is now steering down the barrel of yet another shutdown.

Because Congress hasn’t finished passing the remaining FY2026 funding bills before the current stopgap funding expires, chances of another Government shutdown before the end of January have risen to over 81%.

Gold Breaks $5k as Generation Metals Run Continues

Amidst growing distrust in the dollar and macroeconomic conditions signalling chaos and uncertainty, metals are once again proving a timely salvation. Gold and silver both hit new all-time highs over the weekend, soaring past $5k/oz and $109, respectively. 

A supply crunch in China is sending silver absolutely parabolic, with traders and investors paying a $14/oz premium to stock the precious metal.

Analysts are now calling for the generational metal run to extend further down the curve into hard assets like copper, citing a significant supply deficit that constrains AI, data center, and electric vehicle production.

Solana ETF Flows Undaunted by Volatile Markets

Despite crypto markets suffering from continually harsh drawdowns in recent weeks, ETF investors are proving they’ll not be shaken out. Solana ETFs extended their streak to 13-straight weeks of inflows, capturing another $9.6M in AUM last week.

The same can’t be said for $BTC and $ETH ETFs, which witnessed $1.33B and $611M in outflows over the same time period.

What’s Impacting Macro Markets This Week?

Outside the looming threat of a U.S. Government shutdown, the final week of January looks set to bring a whirlwind of macroeconomic events. Here’s what to expect:

• Tuesday

• India and the European Union to sign “Mother of All Deals” Free Trade Agreement after ~18 years of negotiations

• The SEC and CFTC to host Crypto Era event

• Wednesday

• FOMC Meeting 

• Thursday

• Senate Agriculture Committee to hold market structure markup

• U.K. Prime Minister Starmer visits China to reinforce economic bridge

By Friday, markets will know for certain whether or not the U.S. Government shutdown will commence. Lasting 43 days, Q4 2025’s government shutdown was the longest in history. Crypto suffered large drawdowns over the course of the shutdown, with $SOL plunging 30% to $140 by the time the lights switched back on in Washington DC.

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