Tariffs on Money Are Coming!

Canada, Mexico, China - could all non-Americans be next? Donald Trump has taken delight in slapping tariffs on all and sundry, but so far it’s only been countries in the firing line. That could soon change.

That’s because the idea of implementing a tax on foreign investments into US assets is gaining momentum within the Trump administration. It’s easy to see why: one estimate says such a move could generate north of two trillion dollars over a decade, while also helping to revitalise other areas of the economy and rebalance the US’s trade deficit. What’s not to like (if you’re an American, that is)?

In today’s video, we dig down into this idea and examine its feasibility. We assess the case for taking such a bold step and consider what the reaction might be from the rest of the world. Will the US economy go from strength to strength? Or will such a move tank the markets and cause a recession? Does crypto have a role to play in all this? And what the heck is Triffin’s dilemma?

You can watch that video here.

📈 Crypto Market Forecast 📈

After nearly a month of volatility, it seems that the markets have finally found their footing. This is mostly because of the Fed’s recent decision to effectively end QT by reducing its bond balance sheet runoff from $25 billion per month to $5 billion per month (which is basically nothing). As economist Mohamed El-Erian recently noted, this is supportive of the markets around the margin, but it’s not a catalyst that justifies a V-shaped recovery.

Notably, Fed chairman Jerome Powell emphasized that the central bank’s future interest rate policy would depend on three things: the unemployment rate, the inflation rate, and the Trump administration’s domestic and foreign policies. Although jobless claims are published every Thursday (including this coming Thursday), the next unemployment numbers won’t be published until April 4th, which is almost two weeks from now.

As for inflation, the PCE numbers for February will be published this Friday. While the markets tend to pay closer attention to the CPI, the Fed pays closer attention to the PCE - it is widely known to be the Fed’s favorite inflation gauge. If February’s CPI is anything to go buy, then there’s a chance the PCE will come in lower than expected. This would be bullish for the markets, as it would increase the chances of accommodative Fed policy.

This brings us to the more volatile factors to consider: the Trump administration’s domestic and foreign policies. Domestically, everyone has been focused on the cost-cutting efforts of DOGE, and this seems to have distracted attention from other important catalysts, like the Senate holding hearings this Thursday for Paul Atkins, Jonathan Gould, and Luke Pettit for their positions at the SEC, OCC and Treasury Department, respectively.

If this story sounds familiar, that’s because the Senate held hearings at the end of January for Robert F. Kennedy Jr. and Howard Lutnick for their positions at the Department of Health and Human Services and the Department of Commerce, respectively. To refresh your memory, it took roughly two to three weeks for both to be confirmed in these positions. Chances are it will be a similar timeline for the upcoming trio, foreshadowing a bullish catalyst for crypto in mid-April.

Meanwhile on the foreign policy front, everyone has been focused on Trump’s tariffs, particularly the reciprocal tariffs he’s threatened to levy on the entire planet on April 2nd. What’s frustrating is that the Trump administration appears to be taking the same approach as it did with Canada and Mexico, namely promising to delay the reciprocal tariffs on countries that agree to lower trade barriers and tariffs they have with the US.

Many macro analysts have pointed out that most countries have significantly higher tariffs and trade restrictions on the US than the US has on them. This means that Trump’s reciprocal tariffs could paradoxically result in lower tariffs overall, as other countries would be motivated to lower their tariffs rather than be slapped with a reciprocal tariff of 50-100% on certain products. The catch is that this could create unforeseen supply chain disruptions due to customs controls.

It’s a similar story when it comes to geopolitics. On one hand, it looks like Russia and Ukraine are moving closer to a ceasefire. The Trump administration announced that it had signed a minerals deal with Ukraine, and negotiations with Moscow are reportedly ongoing after the initial agreement from Russia to stop striking energy infrastructure. This is presumably why the State Department believes that an actual ceasefire is very close. That would be bullish for markets.

On the other hand, however, it looks like the situation in the Middle East is quickly deteriorating, with Israel striking Gaza and Hamas reportedly striking Israel for the first time since the ceasefire in mid-January. Fortunately, oil prices have not reacted much to this escalation, suggesting it’s a nothingburger. Unfortunately, it shows that the Trump administration’s attempts to maintain peace have failed, and foreshadows a similar situation for the Russia-Ukraine war.

All in all, it’s a mixed bag that suggests the markets will continue treading water for the next week, possibly longer. Thankfully, the worst seems to be over, but continued caution is warranted.

💰 Fair Valuation 💰

After months of being burnt on hyper-speculative memecoin trades and attention-driven narratives, it seems like crypto investors are finally beginning to place an increasing focus on crypto fundamentals and token valuation models.

For evidence, just take a look at the recent attention placed on revenue-generating projects such as Hyperliquid. Not to mention the number of DeFi projects (Uniswap, Aave, Ethena) starting to implement or consider value accrual for token holders via revenue-share mechanics and buyback and burn programs.

That said, given that crypto protocols operate in a fundamentally different fashion from traditional businesses, how does one determine the fair valuation of a token?

You’re likely to get different answers depending on who you ask. But for the most part, many analysts and investors emphasise ‘revenue’ and ‘longevity’ as key factors when assessing a token’s long-term price potential. Even more so than adoption potential, on account of adoption being relatively non-deterministic, due to variables like national regulatory policies.

The underlying logic for this is two-fold – first, most crypto protocols are generally made up of small teams distributed globally, i.e., low to non-existent capital expenditures (CapEx). This means that traditional metrics like infrastructure investment carry less weight, and revenue - or proxies like transaction fees - becomes a more direct indicator of value.

Second, the average life-cycle of crypto protocols is relatively short, often just a couple of years due to cyclical market shifts (bear markets and lack of funding) and competition. This makes identifying a viable moat and its defensibility an intrinsic priority when using future projection valuation models like discounted cash flows (DCF) – although, granted DCF’s reliance on predictable cash flows makes it a debatable choice for the valuation of crypto protocols. Nevertheless, longevity remains relevant, since most VCs and fundamental investors in crypto often chart long-term investment timelines - either due to long token vesting schedules, or to conviction in the long-term adoption of the technology.

Having said that, when it comes to token valuation, ‘revenue’ means nothing if it doesn’t fundamentally drive value to token holders in some way. A review of recent industry announcements shows that ‘token buyback or burn’ programs are becoming a popular choice for projects to drive value for token holders. Notable examples include Kaito, Aave, Jito and Gearbox.

While popular, the efficiency of token buyback and/or burn programs has been hotly debated. Critics claim buybacks are smokescreen measures temporarily inflating value, masking the effects of vested token unlocks, while proponents argue that buybacks are a strong indicator of confidence in the product.

For what it’s worth, there is credibility to the arguments of both sides. As Dragonfly investor Omar points out, the efficiency of buybacks is subjective to the circumstances of each protocol. Before resorting to token buyback programs to drive value, teams must first evaluate if there are better value-creating alternatives. For example, redirecting that capital towards building a product or feature that has the potential to exponentially increase future revenue.

After all, in a highly competitive industry like crypto, relevance and moats are crucial factors. For incumbent leaders like Uniswap and Aave, measures such as buyback programs are positive, since their moats come from their network effects and market share. For smaller and newer protocols, the moat comes from creating a technological edge over the incumbents – these projects accrue more token value when capital is spent on generating additional revenue and stealing market share from competitors.

Not to mention how ‘revenue’ flows differently for different crypto protocols. For layer 1 projects like Ethereum, one of the more reliable valuation models has been the ‘Network Value-to-Transaction Ratio’ (NVT). To explain it simply, it compares the market cap of a token to the volume of transactions the network facilitates, similar to a P/E ratio for stocks. A lower NVT suggests the token is undervalued relative to its usage. The limitations of this model include unaccounted off-chain activity and inflated metrics due to wash trading.

For DeFi projects like Aave and Uniswap, DCF is often used to assess the token’s fair value (granted the project distributes fees to token holders). To explain it simply, DeFi protocols have identifiable revenue streams (e.g. fees from transactions, staking, or governance). Depending on the perceived moat, analysts can estimate fair value based on discounted future cashflows. The underlying limitation of this model in crypto is that it tends to heavily depend on the perceived relevance or sustainability of the protocol being true.

At the end of the day, it’s hard to peg any one valuation model as being the gold standard for crypto, since broader macro conditions ultimately play a significant role in how much liquidity and capital flows into relatively nascent markets like crypto. Still, it’s better to have one tool in your belt than none. As markets inevitably mature and more TradFi money flows in, we’re likely going to see more capital being allocated to ‘fundamentally’ sound projects than ones in purely attention-driven narratives. It’s just a matter of time.

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🔮 Video Pipeline 🔮

* Tokenised Gold: Why this might just take off in a big way!
* The Cycle Feels Different: Alts have underperformed. Alt explosion incoming?
* ETH Underperformance: Why has ETh lagged behind?
* EU Stimulus: What does it mean for us all?

🏆 What's New at CoinBureau.com This Week? 🏆

* Dino Coins Explained: The Ancient Survivors of Crypto Markets
* Explore The Top Crypto Algorithmic Trading Platforms For 2025
* Abstract Blockchain Review: The Consumer-Focused Ethereum L2
* Crypto Futures: What Are They & How Do They Work?
* An Introduction To Exit Liquidity: Definition, Strategies & More
* Top Wallets to Secure Your BNB Tokens in 2025
* Zircuit Review: The Most Secure zkEVM Rollup Yet?

📖 Quote of the Week 📖

Knowing what trades to make or which coins to invest in isn’t the biggest challenge to achieving long-term gains. It’s your own unchecked emotions and fleeting sentiment.

“The investor’s chief problem – and even his worst enemy – is likely to be himself...” - Benjamin Graham

Team Coin Bureau

Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.