Author: shushu, BlockBeats
Today's financial market situation can be described as globally synchronized in its chill, whether it's the "taking medicine" meme or the "golden pit," participants in the stock and cryptocurrency markets are witnessing the onset of a chaotic era that has already begun.
Related reading: "Global stock markets face the worst three-day performance in 50 years, can the crypto market hold up?"
The Federal Reserve hesitates to cut interest rates, and the market speculates that it has lost its "support" capability, while Trump tears apart market confidence with tariff games, exacerbating external uncertainties. Meanwhile, the crypto market continues to decline under the dual pressure of technical and emotional factors, with several key support levels on the brink. This article explores the current market observations of traders from multiple dimensions, including macro, policy, market data, and technical analysis, for readers' reference.
Macro Analysis
One reason I believe this round of selling still has room to go down is the lack of possibility for "Federal Reserve support" or "Trump support." The following explains why "Federal Reserve support" has become difficult to achieve:
The premise of this market decline assumes that the Federal Reserve will cut interest rates five times this year. However, all FOMC members have stated that they need to see more "certainty" before cutting rates again. Even by June, the Federal Reserve may not get a sufficiently "clear" inflation signal. If companies continue to stockpile until June (which I believe they will), even if broader price increases eventually occur, they will only manifest in the second half of the year. The Federal Reserve must wait for clearer inflation signals.
The issue also lies in the Federal Reserve's own expectations and judgments. If they still view the current situation as similar to 2022, fearing that inflation expectations may "de-anchor," then even if the stock market drops another 20%, it won't shake their stance (as was the case in 2022). From the Federal Reserve's assessment of inflation risks in the March meeting, they indeed still regard the current situation as another 2022.
The Federal Reserve will also reference inflation forecasts from major Wall Street investment banks. Several large banks have predicted that core PCE will rise to 4%-5%. These forecasts will further diminish their willingness to cut rates.
The Federal Reserve places more importance on "hard data." For example, news of DOGE layoffs may not reflect in non-farm data until the end of the third quarter or the fourth quarter. However, rising inflation data is easier and quicker to manifest. In other words, the Federal Reserve itself is a lagging regulator.
Powell cares about his "historical positioning"; he wants to be seen as the new Volcker. At the same time, he is carefully maintaining the independence of the Federal Reserve, so he remains neutral in his statements to avoid angering the White House. I say "attempting" because if you listen closely, you'll find that he is deliberately downplaying the hawkish stance within the FOMC and the Federal Reserve's staff system.
In the recessions of the 1970s and 1980s, nominal long-term interest rates only bottomed out when the economy hit rock bottom. In other cycles, rates often bottomed out earlier. The current macro environment resembles the 70s and 80s rather than other milder recessions.
The final version of Trump's reciprocal tariffs is on the 9th, so before the 9th, it is more of a negotiation period. It is too early to define the overall scope of these tariffs and their impact on the economy, and we shouldn't rush to define whether Trump will be impeached.
The core of Trump's high tariffs is to have leverage and initiative at the negotiating table, so it doesn't necessarily mean he has to actually raise tariffs that much to self-destruct or destroy his approval ratings.
Inflicting damage on the enemy while harming oneself, the damage is not to Trump or MAGA, but to the old money in America, which is the dollar capital group. Therefore, they are anxious and push for nationwide protests, using national righteousness to coerce Trump into compromise.
But who told you that Trump must impose these tariffs and that they must be this high? If the negotiation objectives are achieved during this period, Trump may not suggest lowering the tariff increase. Isn't that so?
If we look at it from a god's perspective, Trump's seemingly outrageous and hasty reciprocal tariffs make the whole world think he is crazy or foolish, using this opportunity to complete negotiations at the table, internally stimulating opponents to rally public opinion to coerce himself, exposing all hidden enemies, and then announcing a reasonable tariff policy on the 9th. Isn't that killing multiple birds with one stone?
Of course, this perspective still needs to wait for the results on the 9th.
- Trump's impact on the current market aligns with our expectations. During the previous election period, I don't know if my friends remember, we mentioned that there would be a "pain period" when Trump took office, and we are indeed experiencing that pain now.
However, what exceeded our expectations is that no one anticipated the "pain" to be this strong, strong enough for us to consider him a madman.
Of course, our criticism of Trump now is simply because we are victims of risk assets, the injured party in Trump's "revolution." But if we change our perspective, those who understand history should know that revolutions and reforms in various countries historically require a period of pain, and these initial revolutions and reforms were also not understood by people at the time and were subjected to the coercion of "national righteousness" brought about by protests.
What we see in historical results is only the success of the revolution, not the pain they endured. I believe what Trump is doing now is similar.
Many people believe Trump is going to crash the economy, but if we look at it from another angle, even if Trump is currently artificially creating a recession, if the economy quickly recovers after the recession and shows sufficient vitality, then who still cares about the current pain?
History is always written for the victors, and Trump has clearly not won yet, so we shouldn't rush to conclusions.
Of course, we originally thought Trump was performing a "major surgery" on America, but it turned out to be "scraping bones to heal," so the pain is too intense. However, if we find a year later that he successfully extended America's life by 50 years, I guess everyone will be shouting that Trump is "great."
- Regarding the pressure tariffs bring to inflation, Powell has previously stated that we need to see whether the inflation transmission caused by tariffs results in one-time price increases. If so, then inflation may not be that scary because short-term price spikes will lead people to abandon consumption or seek alternatives.
Indeed, if that is the case, then inflation may have a weak short-term rebound but will weaken demand, leading to a slowdown in economic growth, most likely resulting in stagflation, and the next step of stagflation is economic recession.
For the Federal Reserve, policies must be lagging; after all, they cannot exceed the speed of economic operation and must adjust strategies upon discovering economic problems. However, while policy lags, Powell's expectation management can be proactive. If stagflation truly occurs, the market will anticipate a recession, and at that time, Powell can once again use his title as a master of expectation management to adjust market confidence, thus acting at a critical moment to prevent the economy from truly entering recession and further demonstrating the independence of the Federal Reserve.
Of course, if tariffs lead to inflation, the worst outcome is a month-on-month increase in inflation, which would directly lead to a rise in long-term inflation expectations, the most pessimistic scenario. Let's hope it won't be like that.
- As for the tariffs leading to a decline in Trump's approval ratings, this is an inevitable short-term reaction, and the possibility of impeachment is also there, but I think the probability is low.
Many of Trump's current actions feel like a gamble to me, and if he wins the bet, approval ratings will naturally come back, and "defecting" Republican members will return. Impeachment may just be a short-term danger signal and may not necessarily lead to the actual impeachment process.
If he loses the bet, it will naturally be a mess. Even if he is impeached, who can turn the tide? Don't expect the Democrats to take over the mess, right? I estimate that at this stage, even the Democrats wouldn't want to take over, after all, it's a hot potato that they fear they can't handle.
So, we can only wait and see if Lady Luck stands by Trump's side.
Currently, negotiations are still ongoing, so before the 9th, we can only discuss from multiple angles. Who knows, while we are discussing heatedly here, negotiations may conclude over there, and tariffs may be unexpectedly lowered, leading to a harmonious atmosphere?
BTC down 5.5%, ETH down over 10%.
There is no clear negative news, and trading volume is not high. It doesn't look like institutions are dumping; it feels more like short-term risk aversion.
It may be the release of expectations regarding the EU and US tariff retaliation on Monday. There hasn't been a major panic on-chain, and the structure hasn't been broken. What is being sold more is the inventory within exchanges.
If US stock futures continue to weaken tonight, Asia may follow with panic, but as long as there is no economic recession, I believe 70K is still a reasonable support level.
I will continue to buy the dip this round, but with a small position and caution, waiting for the tariffs to be finalized and GDP data before making further decisions.
When there is no reason for a decline, it is actually the most worth paying attention to.
Technical Analysis
Latest update on the total market capitalization of cryptocurrencies:
It has now broken below the dashed trend line on the weekly chart. If this break is confirmed, the next reasonable support level is at $1.91 trillion, where the red bull market trend line and the long-term trend line intersect (both are slanted supports).
Of course, it may also further dip to the $1.61 trillion level (which may just be a spike, but to be honest, it's uncertain). If it really reaches this level, the level of pain in the market will be unimaginable, so please be prepared in advance… By the way, if this situation occurs, the possible bottoming time could be in April.
I have already started placing some buy orders for altcoins at prices far below the current level. Additionally, this K-line still has nearly 5 hours until it closes, so I am still observing.
Let's take it step by step.
In fact, this weekend is no different from the previous few weekends, and even from the weekend of February 3rd, there is no difference. It's the same pattern of altcoins declining on Saturday and Sunday, with a small drop turning into a big crash on Sunday night, stopping the decline by Monday afternoon to evening.
A slow rebound in a downtrend will only lead to a more severe drop later.
66-72k, who agrees? Who disagrees?
I have been holding a bearish outlook recently. The 72K-66K range I mentioned two days ago is approaching, and I will observe the rebound situation at that time to decide whether to enter long positions.
Black Monday: BTC makes up for losses
ETH has fallen below 1600, and both the Taiwan and Japanese stock markets triggered circuit breakers. We are witnessing history once again.
I know that such a decline is hard for most people's psychology, so this article will focus on BTC, analyzing on-chain data to directly organize the important levels that have been repeatedly mentioned for your reference.
First is the "STH-RP adjusted for deviation" model, currently:
Green line = 77,156
Blue line = 67,554
Moreover, the range of 71K to 79K remains a relative vacuum area for URPD, so from the perspective of on-chain data, I personally prefer to wait for positions below 71K.
Due to the larger trend being downward, any long operations will be viewed by me as "counter-trend operations." I am not sure how many readers can understand my point, but this is the direction of least resistance in the market.
I know that most people prefer to try to operate on swings, but counter-trend operations are indeed one of the easiest mistakes for most retail investors, and this is also a lesson I learned a few years ago as a novice. I hope everyone can take this as a warning.
Trading is a process of "cognitive realization"; when the difficulty in the market clearly increases, "not operating" is also a form of operation.
There is no need to chase every small swing; the smaller the level, the more the price movement resembles Brownian motion. Focus on the larger trend, stay in the hitting zone, and leave the rest to patience and discipline.
The smoke of chaos in 2025 has already risen, and you and I are witnesses to history.
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