What happened this week?
What a week. Trump’s “Liberation Day” tariff announcement sent markets into a tailspin, but Bitcoin is behaving very unexpectedly.
The week started with Bitcoin bouncing back above $85K, showing surprising strength ahead of Trump’s anticipated tariff speech. This recovery came after a rough end to March, with the broader crypto market following suit.
Then came Wednesday’s bombshell as I’m sure you already are aware. Trump unveiled what’s being called the largest tariff announcement in history, targeting 185 countries with a “reciprocal” structure.
The market reaction was swift and brutal. Bitcoin initially jumped to $88,500 within minutes of the speech, but then plummeted 7% in just three hours. Equities fared even worse, with the S&P 500 dropping nearly 5% in its worst day since 2020. The Nasdaq and Russell 2000 both entered bear territory, and the “Magnificent 7” tech stocks are now down 25% from their peak.
But here’s where it gets interesting. By Thursday, while equity markets continued bleeding, Bitcoin started showing remarkable resilience. As China announced retaliatory 34% tariffs on all US goods, Bitcoin posted consecutive green days while both risk-on and risk-off assets faltered.
This unusual strength amid market chaos has some analysts wondering if we’re witnessing the early stages of Bitcoin’s long-awaited decoupling from traditional markets. Could Bitcoin be emerging as a safe haven during trade wars? Or was $MSTR and $GME propping up the price temporarily last week?
The recession odds btw have spiked dramatically, with Polymarket showing a 60% probability of a 2025 recession, up from just 22% in February. JP Morgan now expects a recession this year. Yet through all this, Bitcoin has climbed out of “extreme fear” territory while equity markets remain near rock bottom.
How am I positioning?
Trump and policy have the wheel right now. Two key factors are driving everything:
First, tariffs. This is a political game that Trump controls. He wants deals, but he’s playing hardball. When he decides it’s time for peace, we’ll get it.
Second, recession risk. This is the real monster lurking in the shadows, and it was growing before any tariff talk. Consumer spending was already weakening. Now we’re seeing a dangerous feedback loop start:
Stock prices drop → People feel poorer → Spending falls → Companies miss earnings → Layoffs happen → Stocks drop more → Repeat
Most talking heads are fixated on tariffs, but I think that’s overblown. No country can afford to ignore the US market forever. Some deal will eventually happen. The REAL danger is what happens while we wait. The longer this drags on, the worse Q1 earnings season will be, and then the layoffs start.
Trump seems perfectly comfortable letting this pain continue. He’s brushing off early negotiation attempts and showing zero interest in quick wins. It’s only been four days since Liberation Day, but his stance is clear.
I’m waiting for two specific signals before making any serious moves:
- Market conversation shifting from “tariff panic” to “earnings disaster” as companies start warning about the consumer slowdown
- Tax season passing (more crypto specific vs equity). Crypto specifically saw massive short-term gains in 2024, and I expect significant selling pressure as people raise cash for their tax bills
Bottom line: I’m ready to buy, but absolutely not in a rush. Let the market fully price in these risks first. The best opportunities come when fear is at maximum, and we’re not there yet.
1 Actionable AI prompt
Here’s what Grok suggested to do in order to prepare for the trade wars. I used a 6 part prompt chain to ask an overview of exact tariff policy, who the winners and losers were, and how to best position here.
Here’s the response from Grok:
Readings for the road
I wrote this piece on March 5th on why I think we’ll see a bottom around April – IMO still holds true if we can avoid earnings deterioration this earnings season:
