4E Observation: Limited Positive Impact of CPI, Market Pressure Remains

The cryptocurrency market is experiencing intense turbulence. In February, Bitcoin plummeted by 17.39%, marking the worst performance for February since 2014 and the second worst in history. As March begins, the market remains weak, with Bitcoin continuously breaking through several key support levels, essentially returning to the levels seen when Trump won the election last year. Since reaching an all-time high on December 16, 2024, the total market capitalization of the cryptocurrency market has fallen by over 30%, and trading volume has dropped by nearly 60%. The exhaustion of short-term positive factors combined with macro risks is triggering widespread panic in the market.

Exhaustion of Short-Term Positive Factors

Currently, there are visibly no substantial positive factors in the market, and market confidence is severely undermined. Last week, the highly anticipated Bitcoin strategic reserve plan was finalized, but this reserve was obtained solely through confiscation procedures rather than directly using fiscal funds for purchase. This means that the market did not welcome new buying momentum, further compressing the market's imagination of "policy benefits from the U.S. government," leading to great disappointment.

Additionally, the first cryptocurrency summit held by the White House last Friday also failed to deliver anything substantial. According to reports, the entire event did not release specific policy documents and did not provide clear guarantees or timelines for directly purchasing new cryptocurrencies. Most speeches were merely expressions of gratitude towards Trump and praises for his "wisdom and strength," with no expected policy benefits delivered.

Compared to the market frenzy and grand policy imagination during Trump's election, the short-term driving forces in the cryptocurrency space have almost completely vanished, lacking even the space for imagination.

Macroeconomic Uncertainty Pressuring Risk Assets

External macroeconomic uncertainties are adding variables to the market. Trump's erratic tariff policies have repeatedly struck the market while also reinforcing expectations of economic slowdown and rising inflation.

With Trump introducing a series of tariffs, prices for various goods, from food to clothing, are expected to rise, testing the resilience of consumers and the overall economy. Goldman Sachs' model shows that the risk of economic recession is rising, from 14% in January to 23%. Similar models from JPMorgan indicate that the market's implied probability of recession has climbed from 17% at the end of November to 31%.

The market is growing increasingly weary of uncertainty, leading to a continuous decline in risk assets. The collapse of tech stocks has forced investors to accelerate the reduction of their cryptocurrency risk exposure. According to coinglass data, since March, Bitcoin spot ETFs have seen net outflows almost every day, totaling over $1.35 billion.

CPI Cooling, but Data May Be Temporary

The only good news from recent major macroeconomic data is that the U.S. February CPI released last night came in below expectations across the board. This much-needed report alleviated anxieties about the U.S. economy potentially falling into a stagflation trap. The strong rebound in tech stocks drove the Nasdaq up over 1.2%, and Bitcoin also rebounded by 2%. However, it is important to note that Trump's tariffs have not yet fully permeated the CPI.

The tariffs wielded by Trump currently mainly fall on China—imposing a 20% tariff on all Chinese goods (10% added on February 4 and another 10% on March 4), while tariffs on Canada and Mexico are still in the threat phase and have not yet been implemented.

Typically, shipping from China to the U.S. takes an average of 25-35 days, and the inventory currently sold by U.S. retailers largely consists of tariff-free stock. Newly purchased goods subject to tariffs are expected to enter end sales only starting in March or April. Therefore, if the market focuses solely on February data, believing that "the worst is over" may still be premature. Thus, the Dow's three consecutive declines and the limited rise in the S&P after the CPI data release reflect this cautious sentiment in the market.

If Trump's tariff policies continue to expand and a tariff war erupts with more countries, subsequent CPI data is likely to face even greater shocks.

Whether the market has entered a bear market remains inconclusive. However, in the short term, the current cryptocurrency market has lost internal catalysts such as "ETF inflows" and "policy benefits," while being exposed to the dual pressures of an escalating tariff war and the risk of stagflation in the U.S. The market, dominated by risk-averse sentiment, is extremely fragile. Unless there are key policy adjustments or favorable economic conditions, sustained bullish momentum in the short term may be difficult to achieve.

4E, as the global partner of the Argentine national team and the only recommended trading platform, supports trading in cryptocurrencies, stock indices, gold, foreign exchange, and other assets. Recently, it launched a USDT stablecoin financial product with an annualized return of 8%, providing investors with a potential hedging option. 4E reminds you to pay attention to market volatility risks and to allocate assets reasonably.