Trump adds tariffs, Spring Festival market disappears

Jessy, Golden Finance

The Spring Festival market did not arrive as expected.

On February 1, local time in the United States, US President Trump signed an executive order to impose a 25% tariff on imports from Canada and Mexico and a 10% tariff on goods from China starting from February 4.

Because the US stock market was closed over the weekend, the impact of the policy was not reflected in the stock market, and the venting of risk aversion was reflected in the crypto market. The market, which had a rare rebound on the evening of February 1, fell on February 2. As of press time, BTC fell below $100,000 and ETH fell below $3,100. The altcoin market also ushered in a new round of declines. Most altcoins even fell to recent lows. For example, Trump, who was not in the limelight in late January, has fallen to the beginning of 10. Gold hit a record high, breaking through $2,800 per ounce. This also fully demonstrates the high risk aversion in the current financial market.

Not only did the Chinese New Year market disappear, but there were also a lot of negative views on whether there would be a market in February. After Trump officially took office, the market has not been able to take a clear direction. At present, the first thing is that the executive order on cryptocurrency issued by Trump did not bring sustained emotional excitement to the market. Instead, it was more like a favorable landing. Trump's release of Meme tokens before taking office consumed a lot of confidence in the industry. And policies like his tariff increase undoubtedly increase macro risks, which makes investors worry about rising inflation and avoid risks.

At present, the macroeconomic situation is ambiguous before the Fed cuts interest rates. In this case, the market will remain volatile.

This time, not only has the tradition of currency price increases during the Chinese Spring Festival disappeared, but even in February and even before the next Fed rate cut, it may be difficult to see a decent rise.

Trump's deal failed, and the macroeconomics became the biggest factor affecting the crypto market?

Originally, investors were optimistic about the market rise in February, mainly because they were optimistic about the implementation of a series of crypto-related policies after Trump took office.

Indeed, after Trump took office, he did fulfill most of his previous promises to the crypto industry, such as signing an executive order to establish a cryptocurrency working group and banning central bank digital currencies. However, the "using Bitcoin as a national reserve", which has the greatest impact on the crypto industry, has not been implemented. Because of this, it has not had much boosting effect on the market.

Before he took office, Trump issued his eponymous Meme, which cut a wave of leeks. Its tokens almost drained the liquidity of the market in the short term, and the worse impact was that it was an act of consuming industry confidence.

It is precisely because of the above reasons that Trump's coming to power did not play a big role in boosting market confidence.

But bad news continued. First of all, Deepseek was bad for US technology stocks and the currency circle. The US's actions of increasing tariffs on Mexico, Canada, and China will most likely cause the US economic growth rate to decline. In addition, the imposition of tariffs may undermine the progress made by the US government in curbing inflation, triggering or exacerbating inflation. The increase in inflation will be further transmitted to monetary policy, leading to another tightening of monetary policy. From the perspective of global trade, Trump's actions of increasing tariffs have escalated global trade frictions, which may cause the global economic growth rate to decline. The International Monetary Fund has also stated that if there is a very serious decoupling and large-scale tariffs, it may eventually lead to a decline in global GDP. The slowdown in global economic development will definitely affect the overall liquidity in the market, and the overall investment amount and trading activity in the market will decline. As a high-risk investment, the crypto market will also fall. Macro uncertainty has become the sword of Damocles hanging over the crypto market. Because of this, some exciting news in the market may only boost the market in the short term. If you want to continue to inflow funds, the macro level still depends on the Fed's interest rate cuts and the real landing of Bitcoin as a national reserve.

When the market fell, it seemed that all the news turned into bad news. For example, on February 2, there was news that El Salvador recently passed the reform of the Bitcoin Act, officially canceling the status of Bitcoin as legal tender.

As soon as this news came out, Bitcoin also fell in the short term. This also shows that the current market has reached a point of panic, and the market sentiment is extremely panic, but it also indicates that a short-term rebound will appear.

The alt season may disappear, the biggest macro risk may have landed, and the market will be mainly volatile next

Under such a complex macro situation, people in the industry may have to accept the fact that the alt season may disappear.

Currently, it has become too easy to issue coins. A large number of new tokens have emerged in the market, there are many projects on the chain, the supply of altcoins has increased significantly, and the total amount of market funds is limited, resulting in relatively insufficient demand. It is difficult for a single altcoin to obtain sufficient financial support to drive up prices.

Faced with such a complex overall situation of altcoins, investors should not fight to the end. They should invest their funds in hot projects in hot tracks and sell them when they make money.

This situation undoubtedly magnifies the aspect of the crypto industry as a casino, and it is becoming increasingly difficult to make money on altcoins. The recent plunge in altcoins driven by the decline of Bitcoin is undoubtedly a constant demonstration of this cruel but must be accepted fact.

In the future, perhaps only a few tokens that have passed the ETF spot will be paid long-term attention by the market and receive long-term capital inflows. In the case of limited market funds, how to choose coins is as important as how to choose stocks in the stock market. The general rise in the market in the past will not reappear. The advantages of mainstream cryptocurrencies such as Bitcoin and Ethereum will become more obvious, and they will attract most of the funds and market attention.

Trump's tough tariff policy is actually a tool for Trump to put pressure on his trading partners in negotiations. Using tariffs to force relevant countries to make concessions on some issues is a game, and if the two sides reach a compromise in the end, it will also boost market sentiment.

What has a longer-term impact on the crypto market is the Fed's interest rate cuts. At present, all mainstream institutions expect the Fed to cut interest rates in June 2025. This also indicates that before June, the market will not react too much because of the unexpected or less-than-expected interest rate cuts.

From the above, it can be seen that in the next few months, the main macro risk to the currency market is the tariff issue. At present, the tariff issue has basically been implemented, and the next step is a game of tariffs between countries.

Before June, there should not be too much macro-negative news, but there will not be too long of an upward trend, and the market will still be dominated by fluctuations.

For investors, if they cannot make a profit in a volatile market, they should avoid the risks brought by volatility as soon as possible.