Author: Bobby Ong, Coingecko; Translated by: Tao Zhu, Jinse Finance
I hope you buy the dip when panic reaches its peak!
This year, every significant drop in the stock market has been due to President Trump's trade policies. On April 2, also known as 'Liberation Day,' Trump pressured global trade, imposing staggering tariffs on every U.S. trading partner, with China being the most severely affected.
This move immediately dealt a heavy blow to the financial markets, and the cryptocurrency market was also impacted. It was not until the bond market encountered serious problems that Trump was forced to retract his position on April 9 (less than 24 hours after the original tariffs took effect), imposing a 10% tariff on all countries globally and suspending the 'Liberation Day' tariffs for 90 days. Unsurprisingly, this brought about a 'whiplash effect,' and after a relatively calm period, the market returned to a 'wait and see' state.
Currently, the most actively traded asset is undoubtedly gold, which is a historically established volatility hedge and safe-haven asset. Gold has been the best-performing asset in 2025, continuing its strong momentum since 2024.
Cryptocurrencies also benefited from this trend, as tokenized gold has long existed in our market, with the most prominent being Tether Gold (XAUT) and PAX Gold (PAXG). While the circulation of XAUT and PAXG has only slightly increased, their market capitalizations have grown by 59% and 78%, respectively, since the beginning of 2024, reaching a total market cap of $1.6 billion by the end of April.
Where will cryptocurrencies go from here? If you bought Bitcoin (BTC) during the dip, congratulations, your returns could now be as high as 25%! BTC has outperformed other risk assets like U.S. stocks, and many are now speculating whether this is the turning point for Bitcoin to prove its strength as a store of value asset.
For a long time, the cryptocurrency industry has promoted the notion that 'Bitcoin is digital gold,' claiming it has unique advantages—ease of transfer and storage. With the rising demand for gold and Trump's tariffs, there have been reports that the Bank of England has extended the withdrawal time for gold bars. If the demand for physical gold continues to rise with market uncertainty, this issue will only exacerbate.
What is currently very clear is that the market will be influenced by Trump's whims for a considerable period of time. Although we currently have a 90-day pause, it is certain that there will be some fluctuations during this process, which means market volatility will escalate.
Even if Trump ultimately cancels most tariffs, the current uncertainty has likely already had costly effects on U.S. businesses. Decisions to relocate production facilities or restructure supply chains take months to implement, and costs may take years to recoup. With no clear progress in sight, management teams are caught in a dilemma about how to plan for the future, especially considering that some of these policies may be overturned during Trump's remaining term or by the next U.S. president four years from now.
Entering May, the old saying 'Sell in May and go away' is particularly important, as this month has historically been a poor performing month for the cryptocurrency market. We just released the first quarter 2025 U.S. GDP data, showing a contraction of 0.3%, which is not a good sign for the U.S. economy as the full impact of the tariffs has yet to be felt. Rumors of 'recession' and even concerning 'stagflation' have been circulating.
However, given Trump's many weaknesses, there may be opportunities for traders looking to 'buy the dip.' An important milestone to watch is July, when the U.S. economy will feel the impact of tariffs on prices and employment, until the 90-day 'Liberation Day' tariff pause ends, along with the upcoming second-quarter GDP data to be released at the end of the month.
Will the U.S. reach positive trade agreements with allies and trading partners? Will China yield as Trump hopes and ultimately reach a significant agreement? Or will the U.S. economic situation deteriorate to the point where Trump has to change course? All these are possibilities, and if you are a gambler, all these outcomes are available on Polymarkets.
Currently, going long on gold seems to be the only surefire investment in the market. As for elsewhere, if you are still investing in the stock market, buckle up, because we will endure more volatility brought about by Trump.
