The cryptocurrency market in the past week has mainly revolved around 'changes in Trump's tariff policies' and the latest signed 'executive order on Bitcoin strategic reserves,' causing significant fluctuations in Bitcoin prices, fluctuating violently in the range of $80,182 to $93,323, which is not good for the market, indicating poor market liquidity. Investors are easily swayed by changes in policies, predominantly led by short-term speculative traders. The cryptocurrency market still needs time to consolidate.
Bitcoin's price is currently maintained above $81,000, down 12.2% over the past week; Ethereum's performance is even weaker, with a weekly decline of 16.8%, continuing to lag behind the overall market. The main reason remains that Ethereum's ecosystem is still being eroded by other DeFi main chains in terms of market share. Currently, investors' interest has shifted towards Ripple (XRP), Solana (SOL), or Litecoin (LTC), which are more politically themed competitive currencies.
Currently, the market trend is also quite simple, with trading topics completely fluctuating with Trump's policies. As long as the trade war intensifies, including Trump unilaterally announcing tariffs and other countries responding with corresponding retaliatory tariffs, the cryptocurrency market will decline; conversely, if it is paused, it will rebound. Since it follows Trump's personal will, it is not very predictable; we can only minimize contract leverage to avoid forced liquidation caused by excessive price fluctuations.
On the other hand, macroeconomic data was also released last week, with the most important being employment data. The U.S. Labor Department reported that the unemployment rate rose to 4.1% last month, indicating an increase in part-time workers. Economists believe that changes in Trump's trade policies make it difficult for businesses to plan for the future, causing the Nasdaq index to enter a downward correction zone.
The non-farm employment population increased by 151,000 in February, below market expectations, while January's data was revised down to 125,000. Job growth mainly came from the healthcare sector (52,000), finance (21,000), and transportation and warehousing (18,000). However, the federal government laid off 10,000 workers, and net job additions in the overall government sector were only 11,000, indicating that government spending cuts are affecting employment. This confirms our earlier mention that under the Trump administration's spending cuts, employment data will certainly weaken, thus increasing the likelihood of interest rate cuts in the U.S.
Under the trend of interest rate cuts, another significant event last week, aside from the tariff war, was White House cryptocurrency czar David Sacks announcing on March 6 that Trump signed an executive order to establish a 'strategic Bitcoin reserve.' This reserve will be backed by Bitcoin assets acquired by the U.S. government through criminal or civil forfeiture proceedings, with the government currently holding approximately 200,000 BTC. Although the market has dropped due to insufficient expectations, the long-term impact on price growth is expected to be negligible.
Calmly waiting for the market to consolidate emotions, the bull market remains unchanged.
Additionally, the executive order requires a comprehensive inventory of the federal government's digital assets and stipulates that the Bitcoin in the reserve will be regarded as a store of value and will not be sold. Furthermore, the executive order will establish a digital asset reserve for the U.S., which will not only include Bitcoin but also other cryptocurrencies seized by the government.
However, the most surprising aspect of the entire executive order is the clear statement that the U.S. government will not purchase cryptocurrencies other than Bitcoin, such as Ethereum (ETH), Ripple (XRP), Solana (SOL), and Cardano (ADA). The overall response from the cryptocurrency industry to this executive order is considered positive, fundamentally affirming that cryptocurrencies are equivalent to valuable assets, especially Bitcoin, which can be likened to digital gold.
Nevertheless, after the announcement, the cryptocurrency market plummeted significantly, with Bitcoin's price dropping by $5,000 in a short time, from $90,000 to $85,000, and then recovering to $87,000, while Ethereum fell by 5% to $2,150. XRP, SOL, and ADA respectively plunged by 8%, 7%, and 10%.
The reason for the significant drop in the cryptocurrency market is quite simple. A few institutional investors initially believed that the U.S. would 'actively' use taxpayer money to purchase Bitcoin, but now it has turned into simply not selling the confiscated Bitcoin and cryptocurrencies, which diverges from market expectations. Additionally, the currencies include only Bitcoin, not the 'altcoins' that Trump mentioned initially, ultimately leading to disappointing selling pressure; however, I do not see this as particularly severe.
The reason is that the market's initial expectations for the Bitcoin reserve were not very high. The market has always focused on a relaxed and clear regulatory environment to promote the development of the U.S. DeFi industry and attract new blockchain-related startups worldwide. If Bitcoin were to drop significantly due to Trump's Bitcoin reserve policy falling short of expectations, it would present a great buying opportunity, as Bitcoin is being irrationally sold off by investors. With favorable regulations under the Trump administration and the foreseeable trend of interest rate cuts in the U.S., coupled with the tariff war's impact being dulled, as long as the U.S. stock market rebounds, cryptocurrencies will also rebound in tandem. We remain optimistic about Bitcoin's future market performance.
The strategic reserve has been approved, but the market has continued to decline, which aligns with what we said last week about not being overly optimistic about the market. If it breaks below 90,000, one must exit. Currently, the market's movement is also within expectations. Day-to-day observation should focus on the strong support level of Bitcoin at 80,000 and Ethereum at 2,000. Left-side players can enter at this position or use a pyramid building approach; right-side players should wait for clear bottom signals to position.
In the past few days, I am preparing for the layout of a divine order that is about to open!!!
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