Author: Carbon Chain Value
On February 3, according to CNBC, cryptocurrencies took a risk-averse trend on Sunday and plunged sharply after U.S. President Donald Trump imposed long-threatened import tariffs on Canada, Mexico and China.
According to Coin Metrics data, the latest plunge was 7% to $93,768.66. The CoinDesk 20 Index, which measures the 20 largest digital assets by market value, fell 19%. Ethereum plunged 25% to its lowest level since November.
According to Coinglass data, the entire network had a liquidation of $2.119 billion in the past 24 hours, including a liquidation of $1.78 billion for long orders and $270 million for short orders. , A total of 718,513 people worldwide were liquidated. The largest single liquidation occurred on Binance-ETHBTC, worth $25.635 million.
On March 12, 2020, the crypto market experienced a short-term rapid plunge. At that time, more than 100,000 people were liquidated. According to Coin data, on March 12, in just 24 hours, more than 100,000 people suffered liquidations across the entire network. The largest single liquidation occurred on Huobi, with BTC worth about $58.32 million, and the total amount of liquidations across the entire network was $2.93 billion.
According to CNBC, Trump signed an order to impose a 25% tariff on Mexican and Canadian imports and a 10% tariff on China, which will take effect on Tuesday, after which American goods began to decline. The United States' trade with these three countries is about $1.6 trillion.
Jim Bianco, founder of Bianco Research, said many people are asking why BTC fell so much because of the tariff news. Because BTC is a speculative asset. It is 2x QQQ (if not, it is 3x). After the stock opened, the S&P futures opened down 117 points, a drop of 1.9%. Remember last Monday, Deepseek also caused the S&P index to fall 100 points, a drop of 1.5%, and NDX futures opened down 600 points, a drop of 2.95%.
Jeff Park, head of alpha strategy at Bitwise Asset Management, said that the continued tariff war will be "amazing" for Bitcoin in the long run because the US dollar and US interest rates will eventually weaken.
In Jeff Park's view, to understand the current tariff issue, it is necessary to consider it from two backgrounds: one is the curse of Triffin's dilemma; the other is Trump's personal goals. By analyzing these two backgrounds, the final result becomes clear: Tariffs may be just a temporary measure, but the final conclusion is that Bitcoin will not only go higher, but also faster.
First, the Triffin Dilemma: The status of the US dollar as a reserve currency gives the United States "excessive privileges" in financial transactions/trade, which has some effects: 1) The US dollar is structurally overvalued because other countries need to hold US dollars as reserves in an inelastic way; 2) The United States must continue to maintain a trade deficit in order to provide these US dollars to the world; 3) The US government can therefore continue to borrow at a lower interest rate than it should. The United States wants to keep point 3, but get rid of points 1 and 2 - but how to do it? The answer is tariffs.
Recognize that tariffs are often temporary negotiating tools to achieve goals. The ultimate goal is to seek a multilateral agreement to weaken the US dollar, which is essentially the Plaza Accord 2.0. One hypothetical scenario is that the US explicitly states that countries must reduce their dollar reserves while requiring them to further extend the duration of their holdings of US Treasuries. In other words, Trump is trying to find a "YCC, not YCC" strategy within the executive branch. Bessant no doubt agrees with this because he realizes that Yellen has left him a bag of garbage, and that Yellen's legacy is to make the Treasury's ability to manage duration almost permanently impaired by doubling the debt financing ratio (adding false liquidity), leaving the US at the mercy of refinancing when interest rates start to rise. The cost to the US taxpayer cannot be underestimated.
Thus, the US is paving the way to achieve the holy grail of fiat money alchemy: lower 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 rate because his own wealth depends on it: real estate. His obsession with Powell cutting short-term rates, and then realizing that it doesn't work, was the catalyst. Never doubt those pure, transparent, profit-oriented motives and stand with him. Mark my words: 10-year Treasury rates will fall no matter what the cost.
Therefore, the asset that should be held is Bitcoin. Against the backdrop of a weak dollar and lower US interest rates, some unreliable economists will tell you that this is impossible (because they cannot simulate national policies), but the prices of US risky assets will soar beyond your imagination, because it is likely that the rising costs associated with the loss of comparative advantages will force the government to cut taxes significantly. The cost of tariffs will most likely be shared by the United States and its trading partners through higher inflation, but the impact on foreigners will be relatively greater. These countries will have to find a way to fend off their weak growth problems, stimulating the economy through monetary and fiscal policies, and ultimately leading to currency devaluation. The angry citizens of these countries will experience a small financial crisis and look for alternatives.
Jeff Park finally said that unlike the 1970s when the world was basically offline, today we are not only online, but also on the chain. So while both sides of the trade imbalance equation need Bitcoin for two different reasons, the end result is the same: higher, faster — because we are at war.
Separately, investors see $90,000 as a key support level for Bitcoin, with some warning that if the cryptocurrency breaks sharply below its support level, prices will fall further to $80,000.
Bitcoin is currently down about 16% from its all-time high of $109,350.72 set on January 20. Over the years, experienced cryptocurrency investors and traders have become accustomed to corrections of about 30% during bull markets.
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