Original author: Carbon Chain Value

On February 3, according to CNBC, after U.S. President Donald Trump imposed long-term threatened import tariffs on Canada, Mexico, and China, cryptocurrencies experienced a risk-off trend and plummeted significantly on Sunday.

According to Coin Metrics data, the latest drop was 7%, bringing the price down to $93,768.66. The CoinDesk 20 index, which measures the 20 largest digital assets by market capitalization, fell by 19%. Ethereum dropped by 25%, reaching its lowest level since November.

According to Coinglass data, $2.119 billion was liquidated across the network in the past 24 hours, with $1.78 billion in long positions and $270 million in short positions being liquidated. A total of 718,513 people were liquidated globally. The largest single liquidation occurred on Binance-ETHBTC, valued at $25.635 million.

On March 12, 2020, the crypto market experienced a brief and rapid decline. At that time, the number of liquidations exceeded 100,000. According to Coin data, on March 12, over 100,000 people were liquidated within just 24 hours, with the largest single liquidation occurring on Huobi, with BTC valued at approximately $58.32 million, and the total liquidation amount across the network was $2.93 billion.

According to CNBC, Trump signed an order imposing a 25% tariff on imports from Mexico and Canada and a 10% tariff on China, which will take effect on Tuesday, after which U.S. goods began to decline. The trade volume between the U.S. and these three countries is about $1.6 trillion.

Jim Bianco, founder of Bianco Research, stated that many people are asking why BTC dropped so much due to tariff news. This is because BTC is a speculative asset. It is 2x QQQ (if not, then 3x). After the stock market opened, S&P futures opened down 117 points, a drop of 1.9%. Remember last Monday, Deepseek also caused the S&P index to drop 100 points, a decline of 1.5%, and NDX futures opened down 600 points, a drop of 2.95%.

Jeff Park, head of alpha strategies at Bitwise Asset Management, stated that the ongoing trade war will be "amazing" for Bitcoin in the long run, as the dollar and U.S. interest rates will eventually weaken.

In Jeff Park's view, to understand the current tariff issue, it must be considered from two backgrounds: first, the curse of the Triffin Dilemma; second, Trump's personal goals. By analyzing these two backgrounds, the final outcome becomes clear: tariffs may just be a temporary measure, but the ultimate conclusion is that Bitcoin will not only rise but will rise faster.

First, the Triffin Dilemma: The status of the dollar as a reserve currency gives the U.S. "excessive privilege" in financial transactions/trade, which has several implications:

1) Other countries need to hold dollars as reserves in a price-inelastic manner, leading to a structural overvaluation of the dollar;

2) The U.S. must maintain a trade deficit to provide these dollars to the world;

3) As a result, the U.S. government can continuously borrow at rates lower than it should. The U.S. wants to keep point 3 but get rid of points 1 and 2— but how to do it? The answer is tariffs.

Recognizing that tariffs are often temporary negotiation tools to achieve goals. The ultimate goal is to seek a multilateral agreement to weaken the dollar, essentially a Plaza Accord 2.0. A hypothetical situation is that the U.S. explicitly states that countries must reduce their dollar reserves while requiring them to extend the holding period of U.S. Treasury bonds.

In other words, Trump is trying to find a "YCC, but not YCC" strategy within the executive branch. There is no doubt that Basant agrees with this, as he realizes that what Yellen left him was a bag of garbage; Yellen's legacy is that by doubling the debt financing ratio (increasing false liquidity), the Treasury's ability to manage maturities is almost permanently impaired, leaving the U.S. at the mercy of refinancing when interest rates start to rise. The cost to U.S. taxpayers cannot be underestimated.

Therefore, the U.S. is paving the way for the Holy Grail of fiat currency alchemy: lowering the dollar and yields.

This leads to the second point: it has been said before that Trump's primary goal is to lower the 10-year interest rate, as his own wealth depends on it: real estate. His obsession with Powell cutting short-term rates, then realizing it doesn't work, is the catalyst. Never doubt those simple, transparent, profit-driven motives and stand with him. Remember my words: at any cost, the 10-year Treasury yield will decline.

Therefore, the asset to hold is Bitcoin. In the context of a weak dollar and declining U.S. interest rates, some unreliable economists will tell you this is impossible (because they cannot simulate national policy), but the prices of U.S. risk assets will soar beyond your imagination, likely accompanied by rising costs due to lost comparative advantages, forcing the government to significantly reduce taxes. The cost of tariffs will likely be borne jointly by the U.S. and its trading partners through higher inflation rates, but the impact on foreigners will be relatively greater. These countries will have to find a way to combat their weak growth issues by stimulating the economy through monetary and fiscal policies, ultimately leading to currency depreciation. Angry citizens in these countries will experience a mini-financial crisis and seek alternatives.

Jeff Park concluded that unlike the world in the 1970s, which was essentially offline, today we are not only online but also on-chain. Therefore, while both sides of the trade imbalance equation need Bitcoin for different reasons, the ultimate result is the same: higher and faster—because we are at war.

Additionally, investors view $90,000 as a key support level for Bitcoin, with some warning that if the cryptocurrency falls significantly below this support level, the price could further retrace to $80,000.

Bitcoin is currently down about 16% from its all-time high of $109,350.72 set on January 20. Experienced cryptocurrency investors and traders have become accustomed to about a 30% retracement during bull markets over the years.

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