Trump's grand plans and the essence of the cryptocurrency crash
*Impact of dollar interest rate hikes and macroeconomic environment*
Although the Federal Reserve's interest rate hike cycle has put pressure on the cryptocurrency market in 2024, its subsequent effects continue to ferment. The expectation of a stronger dollar has led investors to shift from high-risk assets (such as cryptocurrencies) to traditional safe-haven assets (like gold). Additionally, global economic uncertainty (such as the U.S. fiscal deficit expanding to $1.83 trillion) has intensified the market's sell-off of risk assets.
*Market volatility and doubts triggered by Trump’s policies*
On March 2, Trump announced the inclusion of Bitcoin (BTC), Ethereum (ETH), XRP, SOL, and ADA in the "Cryptocurrency Strategic Reserve Plan" and claimed to push the U.S. to become the "cryptocurrency capital." Although the market briefly rebounded after the announcement, doubts about the implementation of the policy heated up.
- **Allegations of Interest Transfer**: Some individuals pointed out that project teams of SOL, XRP, ADA, and others had previously frequent contacts with Trump’s team, which may involve lobbying or interest transfer, raising concerns about the fairness of the policy.
- **Implementation Uncertainty**: Trump plans to push the reserve plan through executive orders rather than legislation, but with the Treasury under financial strain (with a deficit of $1.83 trillion), actual purchasing power is questionable, possibly only completing the reserve through "locking in" or allowing cryptocurrency tax payment methods, lacking substantial capital injection. **Market Sentiment and Speculative Behavior**
The high volatility of the cryptocurrency market has led investors to take profits after the favorable policies were realized. On March 3, some currencies (such as ADA) saw daily gains exceeding 70%, and short-term speculative behavior exacerbated price fluctuations, followed by a market correction.
Trump's latest policy direction on cryptocurrencies
#### 1. **Cryptocurrency Strategic Reserve Plan**
- **Asset Selection**: Trump announced that BTC, ETH, XRP, SOL, and ADA would be included in the national reserve, aiming to consolidate America's leadership in the cryptocurrency field.
- **Policy Objectives**: To reduce market selling pressure (such as the government holding Bitcoin no longer for sale) and attract cryptocurrency companies to pay taxes in cryptocurrencies, indirectly enhancing market liquidity.
#### 2. **Policy Controversies and Challenges**
- **Decentralization Controversy**: Industry insiders criticize the reserve plan for including cryptocurrencies with "obvious centralization tendencies" (such as XRP, SOL), contradicting the decentralized philosophy of cryptocurrencies.
- **Legislative Barriers**: The Republican Party has a slim advantage in the House of Representatives, making it difficult to institutionalize the reserve plan through legislation, likely relying only on administrative means to advance it.
#### 3. **Future Planning**
- **White House Cryptocurrency Summit**: Trump plans to hold a summit on March 7 to discuss policy details with industry leaders, further promoting the cryptocurrency regulatory framework and the development of stablecoins.
- **Long-term Goals**: To attract cryptocurrency companies back to the U.S. through policies, complementing the dollar, in an attempt to salvage the declining global status of the dollar.
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### Summary
The significant drop on March 3 was essentially a market correction after the short-term favorable policies were realized, compounded by the aftermath of dollar interest rate hikes, policy uncertainties, and speculative actions. Although Trump's reserve plan injected short-term confidence into the market, its long-term feasibility and fairness still face challenges, needing attention to subsequent policy implementation details and market reactions.
