4E Observation: Trump Triggers Recession Panic, Stocks and Cryptos Plummet, Where is the Bottom?

On Monday, economic concerns swept across Wall Street, leading to a black Monday for U.S. stocks, with tech stocks experiencing their largest decline since 2022. Tesla led the decline, dropping over 15%, while the market capitalization of the seven major tech companies evaporated by more than $830 billion in a single day.

The bloodbath in U.S. stocks also dragged down the crypto market, with BTC falling below the $80,000 mark for the second time in three weeks, hitting a low of $76,600, essentially returning to the levels seen when Trump won the election last year. The leading altcoin, Ethereum, fell below $1,800, marking its lowest point since October 2023. Since reaching an all-time high in mid-December last year, the crypto market has lost $1.3 trillion, with a cumulative decline of 33%, plunging the market into extreme panic.

Trump's Latest Remarks Ignite Recession Fears

Concerns are mounting that Trump's administration's tariff policies and spending cuts will lead the U.S. economy into stagnation. His latest remarks have intensified these worries, triggering panic among investors.

On March 4, Trump acknowledged in a congressional speech that his economic plan might cause "some disruptions," but he insisted it was aimed at achieving a long-term "golden age." On March 6, he stated that he "hadn't even looked at the market," as the U.S. would be strong in the long run. However, in an interview over the weekend, he indicated that his tariff policies could impact U.S. economic growth and did not rule out the possibility of a recession, claiming the economy was undergoing a "transition period" and that one should not overly focus on the stock market. U.S. Treasury Secretary Yellen and Commerce Secretary Raimondo echoed similar sentiments, suggesting that the economy might be slowing down.

The latest statements from Trump and his team have undermined investors' confidence that the U.S. would change its policy direction amid the market crash, indirectly acknowledging the likelihood of an economic slowdown and the inevitability of a short-term downturn in U.S. stocks.

Increasing speculation suggests that Trump is willing to endure economic and market turmoil to achieve his long-term goals involving tariffs and government downsizing, and he may intensify his strategy of "short-term pain for long-term gain," causing panic among investors.

Safe-Haven Assets Become "Hot Commodities"

In recent years, the main driver of U.S. stocks has been the unexpectedly strong recovery of the U.S. economy, but recent trends have abruptly shifted, with recession fears now sweeping Wall Street. As investors flee nearly all types of risk assets, the previously steady decline of U.S. stocks accelerated sharply on Monday.

Data from Deutsche Bank shows that U.S. stock positions are currently slightly low, marking the first time since August last year. Data from Goldman Sachs' equity sales trading division indicates that as of the week ending March 7, hedge funds have intensified their selling, shorting at the fastest pace since November 2024, with long-term investors net selling $5 billion, and the long-short stock ratio dropping to its lowest level since 2019. The data also shows that the sell-off is mainly concentrated in the tech, financial, and consumer discretionary sectors.

Funds are fleeing the stock market, and traders are reverting to traditional strategies, flocking to defensive havens. U.S. Treasuries rose across the board, with two-year notes leading the way, causing yields to drop by about 8 basis points, marking the largest decline since September 4 of last year. The yield on 10-year U.S. Treasuries fell by 10.5 basis points, the largest single-day drop since February 13. Wall Street strategists and economists have begun to raise their expectations for the probability of a U.S. recession, with the market widely anticipating further declines in the future.

Crypto Market Sees Accelerated Fund Withdrawals, Market Sentiment Deteriorates

Institutional investors in the crypto market are also withdrawing, with related products experiencing net outflows for the fourth consecutive week. According to CoinShares data, crypto funds saw outflows of $867 million last week, bringing the total outflow over four weeks to $4.75 billion. Most of the bearish sentiment is coming from the U.S., where investors withdrew $922 million last week.

Weekly cryptocurrency ETP flows since the end of 2024. Source: CoinShares

The crypto market has many long-term growth drivers, especially regarding U.S. crypto policy. However, the current market is selling off all risk assets, with pricing largely based on sentiment rather than rationality. When there are numerous concerns in the broader market, it is difficult for investors to regain confidence in the crypto market in the short term.

BitMEX co-founder Arthur Hayes predicted at the beginning of the year that Bitcoin could fall to $75,000, and as market sentiment deteriorates, this prediction is becoming increasingly credible. In his latest tweet, Hayes urged investors to maintain their confidence, suggesting that Bitcoin might bottom around $70,000, which would be a normal pullback in a bull market. He believes the next step is to focus on the crash of U.S. stocks and the bankruptcy of traditional financial institutions, and then wait for the Federal Reserve to adopt easing policies to stimulate the economy before re-entering the market.

In the face of the storm, true wisdom may not lie in fighting against the current, but in choosing to drift safely with the tide and build strength. Rather than chasing short-term fluctuations, it is better to shift from a previously aggressive pursuit of high-risk, high-reward to a steady pursuit of certain returns.

4E, as the global partner of the Argentine national team and the only recommended trading platform, offers financial products with annualized returns of up to 8% on USDT, allowing for flexible combinations of demand and fixed-term investments, ensuring funds are neither idle nor unresponsive to market changes.

Additionally, 4E supports U.S. stocks, indices, foreign exchange, gold, and other assets, offering a one-stop trading experience with up to 100x leverage on U.S. dollar-denominated assets. The platform has established a $100 million risk protection fund, adding another layer of security for users' funds. With 4E, investors can closely follow market dynamics, flexibly adjust strategies, and seize every potential opportunity.