Bitcoin is opening the week in the red dipping back down to $80,000 which is now 27% below it's all-time high this year the S&P is now breaking a key trend line on the 200 day moving average a level that we haven't broken since October 2023 and overall the market is feeling extremely bearish after unwinding the majority of the Trump trade according to the Bitcoin CME Futures open interest so to today I want to talk about why all this is happening and what could potentially come next for markets this is not a crypto specific event this
is a macro event and I want to talk today about some of the macro factors that are driving this down turn in my opinion this is all part of a plan by Trump this is all coordinated and it's part of an attempt to achieve a specific economic goal that we're going to speak about today and that goal could have the potential to take markets further down before things get better I'll talk about how far down they can go why this is the case what the strategy is and then I'll talk about when and how I
think things will get better today is more of a macro driven show looking at the factors behind the scenes because crypto stocks none of these markets operate in a vacuum they are all driven by macroeconomic factors and that's basically what is driving the markets down at the moment so let's firstly Begin by discussing the elephant in the room and that are the tariffs you can see Trump came out and said yesterday that there could be a little disruption look what I have to do is build a strong country you can't really watch the stock market
if you look at China they have a 100-year perspective we go by quarters and you can't go by that so Trump here is basically accepting that he is willing to bring the stock market down in the interest of protecting the country and this is a stance that he's been standing by for the past few weeks and it's obviously causing a little bit of turbulence in markets as people expect further downside across risk assets and this is also coming at a time where some of the economic data that we are getting is weakening for the US
economy so people are thinking that there could be an increased likelihood of a recession a weakening economy alongside the tariffs which are driving markets down in the short term human capital does a great job at describing what Trump is currently trying to do and part of the information here helps us understand what to expect going forward they say it's becoming increasingly clear that Trump will do whatever it takes to bring down us yields and with it the US dollar low yields would allow for one easier government debt refinancing and two cheaper capital for companies investing
in the US would boost us manufacturing moreover they would lead to a weaker US dollar a weaker US dollar will boost foreign investment as well as US exports exactly what Trump needs now that he wants to bring manufacturing back to the US so essentially Trump is trying to weaken the US dollar and by implementing tariffs and weakening the economy in the short term he can essentially achieve this as it's extremely hard to have local manufacturing and have a strong good producing country when your dollar is extremely high it becomes too expensive for foreign countries to
buy locally made Goods so by the dollar going down they can bring manufacturing back on Shore and they have better terms of trade via their exports to achieve this Trump is willing to take the us into a recession that is also why we are seeing the likelihoods on beding markets like poly Market of a recession in 2025 increasing with tariffs he Spooks the market short term while again boosting us manufacturing over the long term with the Department of government efficiency he signals austerity which can lower bond yields and he causes an increase in unemployment forcing
power to cut SL ease sooner this is a game of cat and mouse everything Trump is doing in a way is a facade in order to do one thing in the short term that's to bring the US dollar down and also cool markets down now interestingly what Trump wants is to spur on economic growth he wants to get the economy booming again he can't do that in a high interest rate environment so he actually wants Jerome pal to lower the rates how is he going to basically Force the fed's hand well the way he does
that is by forcing a worse economy in the short term so by increasing unemployment by weakening the economy he forces power to cut SL e sooner he can also possibly bring more deflationary measures into the economy which increases the likelihood of rate cuts and the markets are reacting by now pricing in 75 bips of cuts instead of 50 bips in January 10year yields going down from 4.8 to 4.3 the US dollar weakening so the dollar Index is down from 110 to 104 and the US stock market's down from their Peak a risk that remains in
Trump's plan is inflation tariffs can lead to higher price levels but will not necessarily be inflationary since the price increases occur once if inflation does not come down we'll get stagflation like during the 1970s and the best performing asset of the 70s was gold so if we end up with stag inflation expect gold and Bitcoin to outperform if inflation comes under control and I think this is one of the likely cases it would allow the FED to cut SL e sooner in my opinion this is the likely scenario out of the two options which can
also be bullish for Bitcoin in the short to midterm due to the Boost in liquidity longer term however fiscal austerity and economic growth might prove to be bearish for gold and thus Bitcoin relative to equities now that it's being narrated as a safe haven asset that is definitely an interesting Dynamic but what you need to know in the short term right now because this is longer term stuff that could play out over many years is that Trump essentially wants to weaken the economy in order to force Power to lower rates and also bring manufacturing back
to the US if your objective is creating a stronger economy for the US in the long term in my opinion these are actually smart measures however some of the rashness of course the market doesn't like and the uncertainty the market doesn't like but Trump is using this uncertainty to his advantage to manipulate the markets and his plan is working it is spooking markets it's bringing Bitcoin down it's bringing the S&P down if you look at the stock market index many major stocks are down 10 15 20% this week this isn't just altcoins this isn't just
bit coin this is the entire market and obviously crypto is a very high beta risk on asset class compared to the stock market so a 10% move in stocks could be a 20% move in Bitcoin which could be a 50% move in SS like we've gotten recently you have to remember that Bitcoin doesn't operate in a vacuum you can actually see bitcoin's correlation to the NASDAQ and the S&P is the highest that's been in many many months it has a 0.77 correlation Co coefficient to the NASDAQ index at the moment these are historically high levels
gold is the asset actually out of the three that is starting to decouple from Bitcoin and that is due to the fact that gold is viewed a bit more of a safe haven asset than Bitcoin which although it is in a way is still mostly a risk on asset which is more closely correlated to the NASDAQ so when you know we ask ourselves the question of why altcoins getting beaten down so much uh it becomes pretty easy to answer Al front run moves as you can see in the chart in front of you they typically
lead Market expansion then Bitcoin follows that's what we saw we saw altcoins run then Bitcoin running but what ends up happening is that alt sell off first cuz they're risk on assets so when the market goes more risk off these are the first assets to get sold off then you see the Bitcoin sell off then you see the stock market sell off and it typically happens in this order um which is why one of the reasons I think actually the majority of downside in ults in terms of percentages is probably already in because it does
front run the market by a significant extent however of course if Bitcoin keeps bleeding and stocks continue to come down I think balance of probability suggests that they probably will then there could be further pain across markets I'll get into at the end of the video what I would be doing right now to essentially prepare for the likelihood of further pain but markets are relatively efficient in the sense that they price in this data in real time so a lot of the signals that Trump is giving the market has already resulted in a major selloff
obviously this key breakdown on the weekly for the S&P is significant because your next major support level on the weekly time frame you have one here around uh 5600 which we're retesting now and then your next major support is 5300 last time we went to that level was the 5th of August 2024 a couple of months before Trump was elected so just keep that in mind and from a Bitcoin technical point of view your next major support is 7 K I honestly think 70k would be a nice DCA Zone I do have plans to add
a decent chunk of Bitcoin in this Zone as it does look like we have downwards momentum into the bottom of the money noodle indicator here which has been historically a key indicator for Bitcoin so I'm just keeping my eye very very closely on that so to summarize I think there is probably going to be a bit of short-term pain uh but long-term gain because remember if Trump does successfully trigger a weaker economy if we do get a recession the FED is going to be forced to lower rates and lowering rates overall is good for risk
Assets in the longer term it also potentially opens the door for potential monetary actions like quantitive easing if rates are extremely low we know QE typically only happens when rates are near zero so if rates can get back to near zero again and I don't think this will be a quick thing at all it could be over a year um but that would obviously be a good thing for markets but the the FED will basically loose in their policy even if it's not official QE there are other strategies that they can Implement once they feel
like the markets and the dollar have cooled off enough to justify those measures so that is just something to keep in mind that long term this can actually be extremely bullish for Bitcoin extremely bullish for stocks extremely bullish for risk on assets there's just going to be a little bit of pain in the interim and it's there's an interesting discussion as to you know where this leaves the Bitcoin cycle whether this leaves the altcoin cycle um I am not really and I haven't for many weeks and months now thinking about the market in terms of
Cycles I think right now we are in a market of echo bubbles we're in a market of kind of minic Cycles I I don't think the fouryear cycle exists anymore I think the fouryear Cycle's dead I think we're entering a new paradigm which is very responsive to macro so what you'll see is when macro conditions work worsen like they are at the moment Bitcoin sells off aggressively altcoin sell off aggressively and then when the market improves and stocks start reaching all-time highs people will start to front run that move by buying altcoins aggressively buying Bitcoin
aggressively so you're going to see the markets become a lot more price responsive to macro and a lot more price responsive to these shifts in Trends versus before where you can kind of look at this you know bigger fouryear cycle so I think it's some point you have to have confidence that markets are going to come back and at some point your framework should allow for you to profit off this but in the meantime you have to try and be a little bit more defensive maintain your Capital base and do whatever you can to stay
in thek market so you actually benefit from The Next Period where the market turns because there are some positives that do indicate that the market could turn dant toiro points this out he says that layoffs have never spiked to this degree outside of recession so as we said before Trump wants to affect the labor market to force Pal's hand we are already seeing this happen it's the fourth largest spike in 25 years and as Dan says there's likely more coming uncertainty causing a more severe shutdown than anticipated 4% short rate could drop a lot to
buffer liquidity spigot coming he's basically saying that we could see more liquidity injected into the market due to the bad employment data someone asked why is pal so slow to react Dan replied by saying he's still worried about inflation wrong again true inflation reading is the other way so inflation by all measures is actually coming down and China is deflating obviously lower inflation reads over time which we may get in retrospect over the coming months would give the FED even more license to lower rates which is ultimately what Trump wants so I think it's an
inevitability here that rates are lowered and the markets turn around but in the short term you know we're talking the next few weeks potentially months things could be a little bit dicey I'm not anticipating by the way a massive collapse like some sort of Armageddon because I think the market is still structurally a bit healthier than what it was in 2022 in terms of the macro Outlook however there could be a little bit of pain before things get better one interesting thing to look at at though is the historical way that Bitcoin reacts to the
US dollar dropping Jamie points out here that when looking at the recent move in the Dixie through a historical lens it's challenging to be anything but bullish I ran a signal screen for a 3-day negative move of more than minus 2% to minus 2.5% and found that they've all occurred at Bitcoin bare Market troughs inflection points or midcycle bull market Trend continuation so he's basically saying the dollar is dropping massively over 2% other times that the the dollar has dropped 2% it's actually marked or ended up marking at the end of the move a local
bottom four Bitcoin so this very well could be the beginning of a great buying opportunity for Bitcoin which marks a Midway cycle point in you know bitcoin's larger macro cycle once again don't believe in the fouryear cycle but the larger macro cycle for Bitcoin and it also could potentially be the bottom of a local Bitcoin B market when the US dollar ends up reversing puts in its bottom um but this is I mean bullish data obviously there are many nuances here which make it different from previous times the US dollar has dropped uh sometimes the
US dollar drops because people are going into equities now the US dollar is dropping in response to the Tariff news and people aren't going into equities because they're selling their US stocks and they're buying European stocks and other markets cuz they don't believe the us right now has the best investment potential with what Trump is doing so it is a bit of a different environment which leads me to believe it would be a slower recovery than the previous times the US dollar has dropped however it is hard to argue with the data because it clearly
does show that the US dollar dropping ends up marking good accumulation opportunities for Bitcoin which I do agree with uh another bit of hopium here is the fact that historically in election years sorry post-election years after the president gets elected stocks are typically sluggish in the beginning of the year you can see that we typically have weakness around this time in every single post elction year pretty much on average up until about late March so it's interesting that Trump's measures are also coinciding with historical weakness in post-election years for the stock market so what can
you do as an investor I think this applies to both stock market investors crypto investors altcoin investors whatever you're trading in um what can you do right now well the main thing that you have to focus on right now your number one priority is to weather this storm this is not a time to get shaken out because this isn't a structural long long long-term bare Market in my opinion this in my opinion is a short-term reaction to a changing of the god in the US and pain in the shortterm in order to aeve achieve a
long-term result that Trump wants and for that reason instead of getting shaken out of the market you need to prioritize preserving Capital because the only way that you're going to profit when the market turns around is if you stay in the game this is a really really bad time in my opinion to get shaken out soon there's going to be great opportunities in the market I'm already you know looking at some opportunity sporadically in the market deploying when I see an opportunity in the market but generally speaking um this could end up being a great
opportunity so this isn't a time that you want to be getting shaken out and DJ Spartan a very famous figure from crypto Twitter came out and actually released an article today on the Fortress of Solitude where he talks about Survival how your Perpetual OB in crypto is just to survive so what you need to do is make sure that your portfolio and your strategy is actually optimized for survival this is something that I've been speaking about for the past couple of months about a month ago I did my deep dive on how you can actually
change your portfolio in order to increase your likelihood of survival if you didn't watch that video or if you've been late to make moves there's a little trick that you can use to fix your portfolio right now no matter if it's your stock portfolio your altcoin portfolio whatever it is what I want you to do today if you haven't already and you should be continuously doing this over time no matter whether it's the bull market or the bare Market is I want you to go through every single asset that you hold so for example every
single coin in your portfolio and ask yourself if that coin was magically liquidated into US doll today would I have the conviction to buy back into that coin for example if you hold $5,000 in xrp and you wake up in the morning and it's instead of xrp you have $5,000 in usdt would the first thing that you do be instantly Reby xrp with that $5,000 or would you stay in cash if the answer is you would stay in the cash then you should probably sell your xrp Holdings because you don't have conviction in it and
holding an asset at the current price is effectively the same as longing that asset at the current price if your answer is the first thing you would do is buy back that xrp then that's a great sign that you should continue to hold that position or potentially even add more to that position now there is a bit of nuance it's not black and white maybe your answer is okay I would buy back $2,500 of that position in that case that is an indicator that you should sell half of your position and what you can do
is you can go through every single position you have in the market in order to optimize for survival apply this mental framework and assume those positions are liquidated and ask yourself would I buy back in that is the simplest mental framework to cut Bad Assets that you don't believe in to avoid the curse of awkward bag holding the worst place to be in the market and look I'm even in this place with a few alts right now I'm sure many of you are is the awkward bag holding of holding stuff you e you think it
might come back but you also don't really have conviction best in those situations and I know it's hard to cut the asset either deploy into assets you have more conviction in and you're bullish on I think honestly Bitcoin is a great play right now if you you're cutting some altcoins and you and you still want to maintain exposure to the market you don't want to completely go out of the market I think Bitcoin has a strong chance of rebounding first and the top all coins as well like salana ethereum these assets probably rebound first so
there is definitely validity here instead of just cutting altcoin positions and leaving the market in its entirety if you do this exercise to actually go into Bitcoin or salana just so you don't totally uh remove your Market exposure but you still have upside when the market reverses I'll leave that in in in your hands that's something you can consider but wanted to give you that option but generally speaking this framework is very very very valuable if your positions were magically liquidated overnight what would you do I think that's the number one framework because that is
going to help you survive if you're holding coins if you're holding um stocks whatever you're holding if you actually have conviction in those assets this period is going to be a breeze for you you know a few weeks of pain few months of pain you can easily get through it you stay in the market you maintain your capital and then you're on the lookout for opportunities you're on the lookout for dislocations and asymmetries the thing about markets like these bad markets is that the prevalence of dislocations and asymmetries massively increase because markets are even more
efficient when they're pumping markets are much more efficient to price in efficiencies when the markets are hot because more participants are in the market more liquidity comes into the market which stabilizes the market now actually there are more asymmetries or dislocations during low liquidity environments during bearish environments when there are less people arbitraging information asymmetry basically what that means is there are lots of opportunities across the market where there are mispricings versus price versus fundamentals so it is your job during this period and you can be slow because the name of the game is to
survive but it is your job right now to spot these inefficiencies and I'm going to be making a lot of content on coins and just trades in general that I believe are inefficient in the market because over the long term those efficiencies end up being eradicated from the market because efficient markets always end up repricing over time in the short term though that does create opportunity so if you can survive and stay in the game you put yourself in the best position to take advantage of these opportunities that's stuff I'm going to be getting into
later in the week but today I just wanted to explain why this stuff is happening on markets and hopefully give you a little bit of clarity and a little bit of guidance and uh just databased stuff that can help you navigate this next period in crypto because it is really tricky right now and it is really easy to get disheartened but I wanted you to have the facts today and understand why this is actually happening because I think it's very different from what some people think and what some people are saying right now um the
end result could actually be quite bullish for markets if you could just get through this period I'll see you in the next video hope you have a nice rest of your day peace out
