Yesterday, the U.S. stock market experienced a significant drop, with the Nasdaq index plummeting 2.78% overnight, and all seven major tech giants saw declines, with Nvidia dropping over 8%.
The crypto market is also falling along with the U.S. stock market; Bitcoin has dropped below $80,000, reaching a low of $79,532.
So why did it drop so drastically?
The fundamental reason is still the market's panic over Trump's tariff policy.
Yesterday, Trump reiterated that tariffs would be imposed on Mexico and Canada starting March 4.
The market had previously expected April 2 for this, leading to panic in the market.
Many people are starting to worry that Trump is intentionally creating a "mini financial crisis," outwardly shouting about tariffs while actually using his words to impact the market, forcing the Federal Reserve to accelerate monetary easing and take rescue actions.
According to the tools from the Chicago Mercantile Exchange, the market expects the Federal Reserve may start cutting interest rates in June and cut again in September.
In simple terms, everyone is betting that the Federal Reserve will cut interest rates at least twice this year.
So why hasn’t the Federal Reserve cut interest rates yet?
Because the core inflation rate is still above the target, inflationary pressures have not been effectively controlled.
Currently, the U.S. economic data still looks strong.
The Federal Reserve's goal in cutting interest rates is to stimulate the recovery of the U.S. economy, not to serve the global economy.
Since Trump took office, he has introduced a series of policies, such as tariffs and trade policies, which have led to unstable market expectations; therefore, the Federal Reserve will also be more cautious when making interest rate cut decisions.
Recently, Federal Reserve official Jeff Schmid also stated that the optimism regarding inflation is no longer as strong as it was at the beginning of the year.
Although he believes the impact of tariffs is temporary, the Federal Reserve is unwilling to take risks, so they choose to wait and see.
This indicates that the Federal Reserve's strategy is to use interest rate measures to deter the market, rather than rushing to cut rates.
Next, the focus should be on the PCE data that will be released tonight, as it will affect short-term market sentiment.
Currently, the market's expectations for core PCE are quite good; last month's data was 2.8%, and the market expects this month's to be 2.6%.
If the data can truly align with market expectations, it means that the inflation data most concerning to the Federal Reserve may be declining, which would somewhat relieve market sentiment in the short term.
In the short term, the crypto market's movements will still be linked to the U.S. stock market; whether Bitcoin's price can stabilize largely depends on how much the U.S. stocks will fall.
However, $80,000 has already reached my mental price level, so I choose to buy in batches, aligning knowledge with action.
I also have a few orders hanging below, hoping to seize the opportunity to pick up low-priced chips.
Currently, it appears that the market has not stabilized and may continue to decline.
Those with bullets can buy in batches; don't fire all your bullets at once. If you have no bullets, just hold onto your cash and lie flat; it will bounce back soon, so there’s no need to worry too much.
