Is Trump deliberately causing a recession? The cryptocurrency market continues to experience a crash

Source: Talking about Li and Talking about the Outside

Yesterday (March 10, Eastern Time), U.S. stocks continued to suffer heavy losses after the market opened, with the Nasdaq down 4% and the S&P down 2.7%… as shown in the figure below. Giants like Tesla, Nvidia, and Apple all experienced varying degrees of decline, with Tesla being hit the hardest, dropping over 15%. Since reaching a historical high of $479.86 on December 17, 2024, Tesla's stock price has now halved, with a market value evaporating by over $800 billion. Moreover, the X platform was also attacked yesterday, resulting in a crash, indicating that things have not been going well for Elon Musk lately.

Of course, the crypto market is not faring much better. Affected by the overall market sentiment and environment, today (March 11, Beijing time), BTC dropped to around $77,000, and ETH fell below the $2,000 mark, reaching a low of around $1,800. As of the time of writing, BTC is priced at $79,000, while ETH remains around $1,800. As shown in the figure below.

In just the past 24 hours, over 330,000 people across the network have been liquidated, with a total liquidation amount of $940 million, including $742 million from long positions and $198 million from short positions. As shown in the figure below.

From an intuitive perspective, it seems that more and more people have lost confidence and patience in the market. We are currently at a new extreme fear level since the relative low of the last bear market, and the atmosphere of the bear market further envelops everyone…

1. Is Trump Deliberately Creating a Recession?

Recently, there has been a viewpoint circulating online suggesting that Trump is deliberately creating a recession with all the things he is doing now. I wonder how many people think this way?

In fact, we have mentioned Trump multiple times in recent articles. As a successful businessman, Trump seems to be operating the United States as if it were his own company.

So, how can one quickly become a great American president? The simplest way seems to be to "print money" and make the dollar "great" again.

The simplest path to achieve this appears to be manipulating "debt." Under this premise, the actions that can be taken become obvious, such as intensifying economic difficulties and recession contradictions through tariffs, layoffs (the efficiency department that Musk is currently leading is doing this), and forcing the Federal Reserve to take direct action.

The recent market has reminded some people of the circuit breaker incident from five years ago. After the circuit breaker incident in 2020, the Federal Reserve unleashed unlimited QE, and the U.S. government passed a massive stimulus bill. Subsequently, as liquidity concerns eased, the market began to rebound significantly.

Here, let's make a straightforward hypothetical assumption (note that this is just a hypothesis): if U.S. stocks continue to plummet and extreme situations arise, similar to the circuit breaker incident during the COVID-19 period in 2020, will history repeat itself?

We currently do not see an answer to this question, and it is difficult to speculate. In any case, for Americans, there are both opportunities and costs involved.

Of course, the above statements are merely a form of wishful thinking; the short-term market trends cannot be accurately predicted. But one point is worth considering: Trump could become a catalyst for a new, larger bear market, and conversely, he might also become a catalyst for a new, larger bull market. This question is subjective and open to interpretation.

2. Should We Buy the Dip or Cut Losses During a Crash?

I noticed that today, the partners in the group have started lively discussions about the market again. Compared to the calm of the past few days, today's crash has actually improved the discussion atmosphere in the group.

However, opinions vary. Some partners have already acknowledged the bear market, some are still holding U and observing, while others continue to buy in batches…

I remember that every time the market experienced a significant drop, I would receive many messages in the background, asking whether to cut losses or switch positions, or whether to buy the dip. But recently, an interesting phenomenon is that regardless of how the market crashes, the number of messages I see in the background has decreased significantly. It seems that people are no longer eager to ask such questions. I wonder if they have exited after losses, become numb to the declines, or successfully escaped the peak?

At the same time, another interesting phenomenon is that compared to previous articles, the average readership of the current articles from Talking about Li and Talking about the Outside has not decreased; in fact, some new partners (new followers) have started leaving messages asking me how to use a VPN, how to use exchanges, how to buy spot, and other basic questions.

Based on these somewhat "one-sided" personal observations, the pessimism or exit of some veteran investors may be more a result of continuous position losses, while the entry experience of some new investors may be more influenced by recent mainstream media coverage, such as the White House holding a crypto summit and the U.S. strategic reserve of Bitcoin (it should be noted that the current strategic reserve is still at the level of executive orders; this strategically significant matter has only just begun, and we still believe it requires long-term attention. Additionally, it is worth noting that Biden has overturned at least 62 executive orders from Trump's presidency, so will the next president continue to promote the strategic reserve?)… etc. Unlike before when Bitcoin was only reported as a tulip scam, these news items can now be openly discussed.

But regardless, the issue everyone is facing now is the continuous crash of the market. As for whether to buy the dip or cut losses, there is no clear answer or template; it still depends on your own positions and risk preferences.

The short-term market cannot be accurately predicted. Personally, I will always maintain a long-term optimistic outlook, and this relatively optimistic long-term view has been mentioned multiple times in previous articles. In terms of the current overall market sentiment, our advice can be summarized as follows:

- For Long-term Trading

As long as you have a long-term positive outlook on the asset (such as BTC or Tesla), then you should patiently operate based on your risk preference over a larger time frame.

In simple terms, when you decide to make long-term plans for a particular asset, you not only need to see or focus on its long-term potential but also be prepared to endure any possible risks (even the extreme risk of going to zero or bankruptcy) both now and in the future. As long as you can achieve these two points, you can hold it for the long term.

For example, if you see Bitcoin starting with a 7, and you still believe that Bitcoin will eventually rise to $200,000, then you can certainly continue to add to your position in batches (note that it should be in batches, not all at once). You should do what others are afraid to do, rather than what everyone else is inclined to do.

In fact, without leveraging, if you divide 10% of your total personal assets into N parts for continuous purchases (dollar-cost averaging) of Bitcoin, this long-term investment is likely to become one of your most successful investments in the future. As we described in an earlier article: the best time to start this was ten years ago; the second best time is now.

- For Short-term Trading

You should strictly conduct profit-taking and stop-loss operations based on your personal positions and risk preferences.

For example, in terms of profit-taking, you can customize it by combining technical analysis of K-lines, macroeconomic indicators, market sentiment indicators, and corresponding project research results, but the targets should be as reasonable as possible. Especially after the market enters a bull market, you must also take profits in batches and avoid falling into greed and forgetting your trading discipline. Regarding stop-loss, different people have different psychological tolerances, and there is no fixed standard or template. I have shared my basic operation in previous articles: as long as the altcoins I hold drop by 20% during the holding period, I will directly stop-loss and clear my position.

Of course, to avoid unnecessary disputes, the definitions of "long-term" and "short-term" may vary from person to person, and this can only be continuously optimized based on individual positions and strategies. However, for most ordinary people, my personal suggestion is to define the short term as 1-3 months or 3-6 months as a reasonable period, and avoid trading too frequently (for example, trading several times in one day), unless you believe you are a professional trader who can insightfully perceive the market in real-time.

So, whether to buy the dip or cut losses now, you can reconsider based on your positions and risk tolerance. Tomorrow is "312"; I wonder how many people remember March 12, 2020, as shown in the figure below (from the night of March 12, 2020, to the morning of March 13).

3. Finally, let's take a look at some other noteworthy or interesting things from the past few days:

- MicroStrategy's $21 Billion Preferred Stock Plan

Regarding MicroStrategy, we have previously published several articles on related topics. For example, in last month's article (February 28), we discussed some comparative data, as shown in the figure below.

Just yesterday (March 10, Beijing time), news emerged that MicroStrategy has submitted a prospectus to issue up to $21 billion in 8.00% preferred stock (Series A perpetual preferred stock), with the funds potentially used to purchase more BTC.

This is certainly a positive development for BTC (although such positives seem unable to directly reverse the short-term trend), but the $21 billion in new issuance has caused selling pressure, leading to a significant drop in MicroStrategy's stock (along with other comprehensive factors such as market sentiment).

Since last November, MicroStrategy's Bitcoin purchases have already incurred a floating loss of over $3 billion. As shown in the figure below. You laugh at others for being too crazy, while others laugh at you for not seeing through it.

- Exchange Stablecoins Reach Historical Highs

Taking Binance as an example, the amount of stablecoins on this exchange has now reached a historically high level. As shown in the figure below.

Are people just holding coins and waiting or managing their finances? Theoretically, as long as the upcoming market provides a clear direction (such as macro conditions), a new round of phase-based trends for certain cryptocurrencies may restart.