"Trump's impact on the market cannot be underestimated. I learned from his first term: do not act against Trump's tweets and statements."
Compiled & Edited by: Deep Tide TechFlow
Guests: Jonah Van Bourg, crude oil & crypto trader; Avi Felman, host of 1000x Podcast
Podcast Source: 1000x Podcast
Original Title: What A U.S Strategic Reserve Means For Crypto?
Broadcast Date: March 4, 2025
Key Points Summary
This episode of the podcast mainly discusses the following points:
- Market Volatility and U.S. Crypto Strategic Reserve
Bitcoin price experienced significant fluctuations, dropping nearly 20% in a short time before rebounding 18-19%
Trump announced the establishment of a U.S. crypto strategic reserve, triggering a short-term market rebound
The reserve will include various cryptocurrencies such as Bitcoin, Ethereum, XRP, and Cardano
If the strategic reserve is only $500 million, Bitcoin's price may quickly fall back to the 80K range
- Market Technical Analysis and Trading Strategies
Bitcoin often experiences a decline after consolidating at high levels
The inflow of funds indicates that this rebound is mainly driven by spot rather than leverage
Hedging strategies (going long on certain altcoins while shorting BTC) perform well in the current market environment
Bitcoin below 80K is seen as an "extreme value" area, while the 95K area has yet to establish a value consensus
- Trump's Influence on the Market
Trump has historically had a significant impact on the market through his tweets and statements
The "Trump effect" on the crypto market is gradually weakening
The crypto summit on Friday may become a key factor for the short-term market direction
Government purchases of cryptocurrencies may require congressional approval, and the legislative process will be crucial
- Poor Performance of Ethereum
The ETH/BTC ratio continues to decline, with Ethereum underperforming Bitcoin
Ethereum faces significant selling pressure and lacks buyer support
Major sellers include the Ethereum Foundation and investors who entered the market in 2021
- Future Market Expectations
The short-term market may remain chaotic, making it unsuitable for short-term trading
Long-term outlook for Bitcoin is positive, potentially reaching $150,000 to $200,000 within the year
The congressional legislative process will be a key factor affecting the market
The Democratic Party's attitude towards crypto is softening, realizing they previously missed the opportunity to embrace the crypto industry
Impact of Strategic Reserves on the Market
Avi:
The recent market has been crazy. Bitcoin experienced four consecutive days of decline, paused for a day, then dropped 10% on the fifth day, and now it has risen 15%. From the low point, it has increased about 18-19%, but we are still only around 93K, not even back to the previous range. This is truly a wild trend.
Jonah:
What happened? Was there any major news?
Avi:
I mentioned last week that it is rare for Bitcoin to consolidate at high levels without breaking out. I didn't expect a straight drop of 20% over four consecutive days; I thought it would be more volatile. When it was in the low 80K range, I turned bullish, and then we saw the last washout to 78K, which was actually good for Bitcoin. Many investors who were waiting to enter below 80K suddenly got a lot of volume, and the price quickly reversed, leaving those waiting to enter with no time to get in.
Those who sold were likely panic investors, who still wanted to hold Bitcoin but were afraid the price would continue to drop to the 60K range. From a technical perspective, our market conditions are quite good, not to mention the news about the crypto strategic reserve just announced by the president. What is going on?
Jonah:
I didn't move my position throughout the decline; I just watched from the sidelines, tweeted less, maybe a bit panicked, but not too worried because I didn't think it would crash. This was completely unexpected for me; I thought the market would steadily rise as the regulatory environment improved.
I don't think this crypto news will really lead to a new bull market; it is unlikely we will only see upward movement in the next six months. I think it might be sold off for a while, then hit a bottom, and then we will continue to rise. There is also a crypto summit on March 7.
Avi:
I think this private summit is somewhat similar to other catalysts around Trump. When he spoke at the Bitcoin conference, we first saw a significant rise, followed by a sell-off. Many people are excited about the idea of a strategic reserve. I must say, this is indeed big news, especially for Solana, XRP, and Cardano, as Trump directly mentioned them. It is surprising to mention Cardano.
Jonah:
It's actually not that surprising. If you look at the top non-stablecoins on CoinGecko, you will find: Bitcoin, Ethereum, XRP (whether you like it or not, this "air" project has a market cap close to $300 billion), then stablecoin Tether, followed by BNB (but that's a Chinese coin, and Trump doesn't like China), then Solana, USDC, and finally Cardano, with a market cap of $50 billion. After that, there’s Doge and a bunch of other projects. To be honest, isn't that just the top cryptocurrencies excluding the Chinese coin?
Avi:
You make a good point, but I do think that if the government is going to buy cryptocurrencies, it should focus on those that are truly useful and have real potential. This is a strange argument for me, because we should take a step back and think: why would the government want to buy projects that have no real users, no real future, or real value? Are they not doing any homework?
Jonah:
I certainly agree with you, Avi. Cardano represents everything that makes both of us want to leave the crypto space. If Trump wants to express himself correctly, he should say we will build a strategic crypto reserve, primarily in Bitcoin, then add some Ethereum and Solana because they have traction. Then XRP and Cardano can be included because they have high market caps.
But if you are cutting funding for U.S. scientific institutions while saying the country is about to go bankrupt, and at the same time saying you want to use taxpayer money to buy Cardano, that is indeed hard to justify.
Avi:
There are two paths that can lead to price increases. Unless the crypto summit on Friday announces that the U.S. will allocate hundreds of billions to Bitcoin, we won't see an increase. That is the threshold: will we get more details in the next seven days saying the U.S. will allocate hundreds of billions? If the crypto strategic reserve is only $500 million, we will quickly return to the 80K range.
Jonah:
If they announce this, it will make their transaction price worse. That would be too crazy; I wonder if they are really that foolish. The information dissemination has been so poor that the answer might be yes, they really are that foolish.
Bitcoin: Value and Momentum
Jonah:
Last Friday, S&P 500 futures fell sharply, marking the largest drop since 2025. Although the stock market also experienced similar severe fluctuations in 2024, overall, the market has become more unstable. In contrast, Bitcoin did not crash like the S&P 500; instead, it performed relatively steadily.
Avi: I have been using the value and momentum analysis framework. Currently, we need investors to rediscover the value of Bitcoin, and I believe this has already been achieved. The market generally views below 80K as an extreme value area for Bitcoin, which is why we did not stay below 80K for long. The small trading range around 95K is not seen as a value area, so there is not enough momentum to attract buyers.
Momentum is mainly generated through news catalysts. If Trump announces that the U.S. will buy a large amount of Bitcoin, it will immediately create upward momentum; otherwise, we must rely on value support. And how do we establish a sense of value? By trading long enough within a specific price range.
Right now, 85K is not seen as an attractive value range because we just traded at that position. But if we stabilize trading above 90K for two months and then pull back to 85K, that price point will suddenly become a "discount price," greatly increasing its appeal to investors.
Currently, the clear value area is below 80K—you can confidently buy Bitcoin below 80K, and I believe you will be satisfied with this decision a year from now. Of course, this also means you may not wait for this opportunity. But I also think 95K is not a value area. Therefore, in the absence of significant positive news, I expect we may oscillate between 85K and 95K for at least a month.
Jonah:
I agree with some of your points but disagree with others. I agree that traders will anchor to the price at which an asset has consolidated for a long time. If we trade around 100K for three months, then participants will anchor themselves to that position. Then if it trades at 80K, it looks cheap; if at 120K, some will take profits.
However, the notion that cryptocurrencies rarely experience sell-offs after consolidating at high levels, while I agree with this, feels somewhat misleading. Because essentially, you are saying: cryptocurrencies rise, then stop rising, and after that, either continue to rise or fall. If it doesn't continue to rise, then it will fall. This is somewhat obvious.
The Trump Effect: Policy Announcements and Market Reactions
Avi:
I remember we previously discussed that Trump's influence on Bitcoin would be similar to Musk's influence on Doge. At first, everyone bought Doge because Musk might say something on Twitter, and the price could rise. Now that Trump has made Bitcoin his pet project, the situation is similar. This pattern has unfolded well, so now entering the next phase of decline, each time he mentions cryptocurrency, the influence diminishes. He needs to take concrete action.
It is worth noting that we knew about the first White House crypto summit on February 28, while the crypto market was crashing at that time. I wish I had thought: Trump is likely to do something to ensure this summit doesn't look like a complete failure. Now it’s worth keeping an eye on the White House schedule; whenever trading any asset, it might be wise to check the White House agenda and consider whether Trump has the motivation to help or hinder that trade.
Jonah:
You make a good point comparing Musk and Trump's influence on the market. From my trading experience during Trump's first term, I learned a profound lesson: never act against Trump's tweets and statements.
Trump had a huge impact on the market during his first term. During the COVID-19 pandemic, when oil prices were low, he claimed he would force OPEC to cut production, causing oil prices to soar 30-40% in a single day. This kind of surge is extremely rare for a non-cryptocurrency commodity. When prices were high, he publicly pressured OPEC to stop cutting production every day, and he actually did so. He wanted oil prices to stay within a range, so he would make bearish comments at the top of the range and bullish comments at the bottom. For the stock market, he tweeted to push it up at every opportunity, claiming "new historical highs," "it will go higher," "we will introduce more Trump tax cuts," and so on, the "Trump effect."
You saw the sharp rebound in cryptocurrencies after he tweeted about the crypto strategic reserve. What I want to say is that this increase has already happened, and I don't think he will release some brand new super positive news on Friday that will push us up another $10,000 or so. Because such tweets only happen once, and it has already been sent out today.
I remain very optimistic about cryptocurrencies; I believe we will easily reach $150,000 by the end of this year, maybe even $200,000. If I were a short-term trader, I might sell Bitcoin here and wait to buy back at 87K, but that’s not my trading style.
Democrats and Crypto Policy
Avi:
The Democratic Party is starting to awaken to cryptocurrencies. At least two people I know within the Democratic Party have contacted me to discuss possibly writing a commentary on how the Democrats have messed up cryptocurrency, as they both realize that cryptocurrency largely emerged from the Occupy Wall Street movement, which was entirely a movement supported by the Democrats.
Fifteen years ago, the idea of resisting big banks was entirely the domain of the Democrats. Distrust of financial institutions and skepticism towards firms like Goldman Sachs and JPMorgan were completely part of the Democratic camp at that time. So they had a real opportunity. That’s why if you look back at the origins of Ethereum, you will find that many of the key players, even to this day, are still supporters of the Democratic Party. I think Bitcoin has always leaned more towards a libertarian stance, but if the Democrats had just gone with the flow instead of trying to stifle it, they could have achieved great results in the crypto space.
I think they are starting to realize this now. So I believe they will soften their stance because this is not a politically advantageous issue for them.
Poor Performance of Ethereum
Avi:
Ethereum's performance has been terrible; ETH is now trading at only $2,430, which is simply unacceptable.
Jonah:
That's right; I won't touch Ethereum in the short term.
Avi:
To be honest, I recently tried a strategy: going long on altcoins while shorting BTC. This strategy has actually worked quite well. Many altcoins have already bottomed relative to Bitcoin, especially some AI coins I am heavily invested in, like ARC, Virtuals, AI16, and AIXBT. These coins have performed well relative to Bitcoin recently. I also built a significant long position in SOL, similarly hedging against BTC. But I basically had to clear out the ETH/BTC portion of my portfolio.
Jonah:
ETH/BTC has been performing poorly; what’s going on?
Avi:
Dude, I really had to clear it out. I kept all my other positions, but this one was cut within 24 hours of building the position because even during market turbulence, ETH completely failed to perform. What’s most surprising is how few people are willing to buy this asset. I originally thought the sellers had run out, and I might be right about that, but what I completely misjudged is—this asset has virtually zero buyers.
Jonah:
Not only that, but there are also a large number of sellers, including the Ethereum Foundation and all those who entered the crypto market in 2021 but are only now checking their portfolios. Ethereum has been trading heavily.
Observations on Cardano
Avi:
Interestingly, Cardano is actually held by the most ordinary people. Trump may be trying to reach out to the general public—he wants ordinary Americans who hold cryptocurrencies to become wealthy. Many Americans do indeed own Cardano. Today I spoke with someone who said, "You know about this cryptocurrency, right? I’ve held some Bitcoin and Cardano for four years; what do you think I should do?" I told him he should definitely sell Cardano and switch to something else because today is a good day to sell Cardano. But ordinary people do indeed own Cardano.
Analysis of Market Funding Structure
Avi:
One particularly good thing is that this rise has basically not seen an increase in open interest (OI). If you look at futures, one of the highest hit reversal signals is when a lot of people enter with leverage. This rise seems to be driven by spot, and it looks like people are participating in this rise with cash rather than just a bunch of speculators buying with leverage, which is a good sign for Bitcoin.
Jonah:
There’s another explanation; it could be cash, which could explain why OI hasn’t increased, or it could be a lot of trading between market makers without really establishing positions, just high-frequency trading impacts due to volatility.
Avi:
Looking at the funding rates, it does seem that a considerable number of shorts entered on Saturday. One of the biggest tricks in life is to stay alert on weekends. I think it’s easy to pay attention to these things during the weekdays and then completely ignore them on weekends, but if you observe on weekends, you gain a huge advantage. Many important events in this market have occurred on weekends over the past year.
Future Market Outlook
Jonah:
I believe this market will continue to be chaotic for a while; I don’t think this is a good market for short-term traders with a 2-7 day outlook. I feel unprecedented uncertainty in the short term, unprecedented confidence in the long term, and a 6-8 out of 10 confidence in the mid-term (6 months from now) that we may be at a higher position.
Aside from some tactical opportunities, like trading news when the price hasn’t moved yet and some slower-reacting assets, I don’t think this is a market where you want to trade heavily. Once we gain a clearer understanding of the Trump administration's cryptocurrency policy, the market will enter a healthier and more stable trading environment.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
