Why Crypto Will Survive Trump's "Shock and Awe" Trade War |
I first recommended bitcoin in 2016. |
I want you to think of all the market events we've been through since then. All the conflicts, crises, collapses, crashes and panics. |
The pandemic outbreak and Brexit in 2020. The Russian invasion of Ukraine and FTX collapse in 2022. Record high inflation and the Israel-Hamas conflict in 2023. The unwinding of the yen carry trade in 2024.
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During each crisis, bitcoin crashed – sometimes as much as 63%. After each crisis, bitcoin rallied to all-time new highs. |
Through all these ups and downs, bitcoin is up 19,662% since I recommended it nearly a decade ago. |
Why? |
Because outside of the collapse of the FTX exchange in 2022, none of those events had anything to do with bitcoin. |
Zilch. Nada. |
Yet, when the spaghetti hit the fan and the broad markets panicked, bitcoin sold off, too. |
If you're a long-time reader, you probably know the answer to this dilemma. |
If you're new to crypto, I'll explain why President Trump's recent "shock and awe" tariff campaign is just a temporary setback to bitcoin's long-term ascendancy. |
A Shockwave Through the Markets |
On Wednesday, President Trump announced one of the most aggressive tariff packages in history. And it sent a shockwave through global markets. |
Since Wednesday, the S&P 500 has plunged 9% and the Nasdaq 10%. The sell-off didn't stop at our shores. Markets in Japan, Toronto, Australia, and London are all down as well. |
Bitcoin hasn't been spared either and is down 4%. |
Now, I think we're witnessing a knee-jerk reaction by the market. It's not like any of this came out of the blue. President Trump has been threatening to reset U.S. trade relations for years. |
What I believe did catch the market off guard was the incredibly punitive nature of the tariff package. |
The administration imposed a universal 10% tariff on nearly every U.S. trading partner starting April 5. And reciprocal tariffs of up to nearly 50% starting April 9. |
That's why some commentators are calling the global impositions of tariffs a "shock and awe" campaign. |
(Canada and Mexico, the United States's two biggest trading partners along with China, aren't subject to the new measures. But the Trump administration had already imposed 25% levies on products from those countries earlier this year.) |
Will this campaign work? I don't have a crystal ball. So I don't know. |
What I do know is that President Trump is no neophyte when it comes to financial markets. I'm sure he knew the markets would throw a fit over his tariffs. |
So why did he impose them anyway? |
If you look at the bigger picture, I think the president wants to bring down interest rates. |
Let me explain… |
At the least, tariffs are expected to slow down the economy over the short term. If that happens, President Trump is betting the Federal Reserve will lower interest rates. |
Why does he want interest rates lowered? Because he's staring at $19 trillion worth of U.S. government debt that needs to be rolled over in the next 24 months. |
In January, the 10-year Treasury bond rate was 4.8%. Today it stands at 3.9%. That means if the Treasury Department rolled over all $19 trillion of government debt today, it would save almost $190 billion per year in interest payments. |
That's a strong incentive to temporarily tank the U.S. economy. |
The president also wants to increase U.S. manufacturing. And tariffs could force American companies to reshore their operations. |
I believe that's the long game he's playing. Will it work? Again, I don't know. We'll have to see. |
My bigger point is this: None of the trade war talk has anything to do with bitcoin. |
Just like Britain's exit from Europe, Russia's invasion of Ukraine and the pandemic had nothing to do with bitcoin. |
Instead, it's the result of a common phenomenon in the markets: When panic strikes, investors sell "risk" assets first. |
Crypto assets, including bitcoin, have been lumped in the "risk off" asset bucket. |
When uncertainty increases, investors generally sell off risk assets. And since bitcoin is incredibly liquid, it's one of the first risk assets panicky investors offload. |
That makes these sell-offs incredible buying opportunities for those who know how to handle them. I'm personally licking my chops for bitcoin to go lower so I can add to my stack before the next leg higher. |
The Bull Market is Intact |
Friends, bitcoin is completely unaffected by these external crises. The adoption story has absolutely nothing to do with tariffs or geopolitics. |
We've seen this play out time after time. |
The market has a knee-jerk reaction and sells bitcoin. Investors get clarity on the event. They realize it has nothing to do with crypto. They come back, and prices surge. |
I'm confident that we will see that again. |
This is the same conversation I had with you during the pandemic and the FTX collapse in 2022… And the regional banking crisis of 2023. In my view, the volatility back then was worse than it is now. |
Just take the pandemic, for example… |
The S&P 500 was down as much as 36% and bitcoin as much as 50%. At the time, I said when you pull the camera back a year from now, it's going to be a non-event, and bitcoin is going to be significantly higher. |
That's exactly what happened. Bitcoin dropped from $10,000 to about $4,000. A year later, it rallied to $68,000. |
Friends, I want you to know that bitcoin is a great asset. But even if you own great assets, you still get buffeted by volatility. There's nothing you can do about that. |
What you have to focus on is that when the volatility ends, which it will, your assets will go back up in price. And more than likely, they'll go back up to new highs. |
That's the whole game. It took me a long time to learn that. That's why I'm sharing it with you now. |
Let the Game Come to You! |
Big T |
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