4E Observation: The unexpected impact of tariffs shatters illusions, and the market plummets again

March 4th marks the beginning of a comprehensive crash in the cryptocurrency market. Bitcoin (BTC) plummeted rapidly from a high of $95,000, falling below $83,000, with a 24-hour decline of 10.49%. The altcoin market is even more devastated, with Ethereum (ETH) dropping below $2,100 and a staggering 24-hour decline of 16.83%, hitting a recent low. The market experienced a swift reversal from bullish to a waterfall-like washout, resulting in a brutal double whammy for both bulls and bears.

"Multi-Currency Reserve" Tests the Seriousness of BTC's Strategic Reserves

The day before, amidst a generally gloomy market, Trump made a significant announcement, declaring that BTC, ETH, XRP, SOL, ADA, and other cryptocurrencies would be included in the U.S. strategic reserves, promising to push for regulatory easing. Following the news, Bitcoin's price skyrocketed from $85,000 to $95,000 in just three hours, and altcoins entered a full-blown rally.

However, after the excitement, doubts arose. Bearish representative Arthur Hayes bluntly stated that Trump was merely talking, and the government had no money to buy coins. Broader criticism focused on the idea of a "multi-currency reserve," questioning the absurdity of using highly centralized projects like ADA and XRP as reserve assets, which would only undermine the seriousness of BTC's strategic reserves and further reduce the likelihood of the BTC reserve bill passing at the federal level.

Some analysts believe Trump is playing the old "high open, low close" routine: first throwing out the radical idea of a "multi-currency reserve," then ultimately retreating to a "Bitcoin-only reserve" as a compromise to gain congressional support.

Regardless of the truth, it exposes the increasing market divergence. The gap between expectations and reality regarding Trump's policies has led to a negative sentiment among investors in the industry, causing Bitcoin to rise and then fall, followed by a downward trend.

Tariff Hammer Exceeds Expectations, Shattering Illusions

The Trump administration's recent tariff policies targeting Canada and Mexico have been a focal point for the market. Just last week, Trump was vague and contradictory about the timing of the tariffs, leading outsiders to believe it was a negotiation tactic, and that a new agreement would ultimately be reached. However, that hope has officially been dashed.

On Monday, Trump announced that tariffs would be imposed on Mexico and Canada starting March 4, clearly stating that there was "no room for negotiation." Additionally, tariffs on Chinese goods would be raised to 20%, and starting April 2, "reciprocal tariffs" would be implemented on the EU, Japan, South Korea, and others. This hardline stance exceeded market expectations. Canada and China announced a series of countermeasures on the same day, and Mexico hinted at retaliatory actions, fully igniting the tariff war.

The three countries—Canada, China, and Mexico—account for 40% of U.S. total imports and exports. The increase in tariffs will raise the prices of imported goods, undoubtedly exacerbating inflationary pressures in the U.S. Even the usually cautious Warren Buffett rarely spoke out, warning that tariffs "are, to some extent, an act of war," which could raise inflation and harm consumer interests. Meanwhile, signs of a slowing U.S. economy are becoming increasingly evident. The Atlanta Fed's GDPNow model indicates that U.S. GDP will shrink by 2.8% in the first quarter, down from a previous estimate of a 1.5% contraction. Concerns about the U.S. falling into "stagflation" are rising, putting pressure on assets that rely on liquidity and risk appetite.

In a first-time impact, all three major U.S. stock indices closed lower on Monday, with the Dow Jones down 1.48%, the S&P 500 down 1.76%, marking the largest drop of the year, and the Nasdaq down 2.64%, erasing gains since the November elections. Tech stocks led the decline, with Nvidia plummeting 8.69%, hitting its lowest closing price since September 2024. Since the approval of the spot Bitcoin ETF, the correlation between the crypto market and U.S. stocks has become extremely strong, with traditional market turbulence quickly transmitting to the crypto market and being amplified, leading to another significant drop in cryptocurrencies. If U.S. stocks continue to weaken, the crypto market may face even greater adjustment pressures.

Any Positive News Could Catalyze a Double Whammy

Amidst the low market sentiment, investors are pinning their hopes on the inaugural White House cryptocurrency summit scheduled for March 7, where Trump will gather industry leaders to discuss regulatory policies, stablecoin regulation, and Bitcoin's potential role in the U.S. financial system, which may set the tone for cryptocurrency regulation in the next four years. The market is eager for more substantial outcomes from the meeting to boost confidence and drive prices up.

However, in the current macroeconomic environment, with headwinds, continuous outflow of institutional funds, and exhausted buying momentum from retail investors, the market's reaction to news has become extreme. The crypto summit may spark new policy ideas, but investors should be wary that any positive news could become a catalyst for a double whammy.

For ordinary investors, maintaining financial flexibility and sufficient liquidity may hold more long-term strategic value than blindly chasing rebounds. 4E, as the global partner of the Argentine national team and the only recommended trading platform, offers financial products with an annual yield of up to 8% on USDT, allowing for flexible investment without idle funds while waiting for market changes.