Source: Talking Li, Talking Outside
The focus of everyone's attention in recent days seems to have shifted to the issue of tariffs.
On April 3rd (Beijing time), U.S. President Trump announced new tariff policies against multiple countries globally, including setting a 10% minimum benchmark tariff for trading partners and imposing higher tariffs on certain trading partners, with total tariffs on China reaching as high as 54%.
On April 4th, China also began to retaliate against the U.S. tariff policies, announcing a 34% tariff on all imported goods originating from the U.S. (note the wording here: originating from the U.S.).
Regarding the issue of tariffs, there are currently many viewpoints online, but one point is basically unified: the trade war has already thrown the market into chaos and has thus triggered panic and new uncertainties in the financial market.
Why is Trump doing this?
Currently, a popular opinion suggests that Trump hopes to lower the government's debt financing costs; to achieve this, some situations need to be manufactured to facilitate a decrease in interest rates.
So, is this a good or bad thing?
This issue still needs to be viewed from both short-term and long-term perspectives. In the short term, it is definitely not a good thing, as U.S. stocks are plummeting, and crypto assets are also crashing, and the negative issues brought about will directly lead to a larger-scale crisis in the financial market. However, if it can lead to a significant decrease in interest rates, then from a longer-term perspective (considering only the financial aspect, without political factors), the large-scale new liquidity brought about by low interest rates could potentially spur a new wave of rising enthusiasm.
Of course, many conspiracy theorists online have elevated the issue of tariffs to a higher level of national politics, with some even directly linking it to the potential for a third world war, seemingly presenting a well-founded analysis. It is difficult for us to evaluate this; different people will always have different opinions, and it depends on your own perspective or beliefs.
Anyway, we won't consider too many profound issues; we simply view the tariff issue as an economic strategy of Trump, meaning he might hope to artificially create some crises, triggering short-term panic in the global market, and then at the right moment, bring out prepared response plans to stabilize the market, ultimately making Trump and America great again.
Trump is a successful businessman and a successful politician; he can't really act mindlessly and keep the U.S. stock market on the verge of collapse for a long time. U.S. bonds are the lifeline of America; first solving the basic U.S. bond issues and then pulling up the stock market seems to be a priority choice, and this also involves a trade-off between short-term pain and long-term pain. If a potential economic crisis (or recession) forces the Federal Reserve to intervene and create a low-interest environment through rapid interest rate cuts, then this might be what Trump desires.
In short, there is always an important intrinsic causal relationship among U.S. stocks, U.S. bonds, the dollar, and commodities. If you were Trump, facing some of the current issues in the U.S., what choices would you make?
Let's return to the topic of the crypto market.
In recent days, quite a few people have been leaving messages in the background asking me whether it is a bull market or a bear market, and what they should do.
If you are still struggling with whether it is a bull or bear market, you should first think about what your definition of a bull market or bear market is. We have also discussed this question in previous articles on Talking Li, Talking Outside.
Everyone's judgment criteria are different. If you believe that a drop of more than 70% in your investment portfolio indicates a bear market, then for you, it is indeed a bear market. If you think that Bitcoin breaking below MA200 indicates a bear market, then for you, it is a bear market. If you think that a death cross between EMA21 and EMA55 on a weekly chart indicates a bear market, then for you, it is not yet a bear market. If you believe that if more than half of the KOLs or bloggers you follow shout 'bear market,' then it is a bear market for you. And so on...
In fact, the definitions of bull markets or bear markets by others are not important to you; seeking validation for such questions is not very meaningful for yourself. The key is how you perceive the issue of bull markets or bear markets.
Remember in the last article (April 1), we revisited (the Bitcoin indicator template), and if you are considering based on those long-term indicators, we believe that at the moment it is not yet a true bear market, or it can also be described as only a transitional bear market (or a major level correction). If we extend the cycle further, it is highly probable that Bitcoin will continue to reach new highs; it just depends on whether you can wait until that time. Maintaining patience is not easy, but I believe it is what is most needed right now.
Short-term trends cannot be predicted, but long-term trends are still very clear!
In the short term, some people say Bitcoin might drop to $50,000 this year, while others say it might rebound and rise to $120,000 or even higher; both directions are probabilistic. As we mentioned before, if you are a professional trader, or technical type, or you can foresee the short-term market, then you can certainly engage in short-term trading at different levels (hourly, daily, etc.) or even do contracts, and regardless of market fluctuations, you have the opportunity to make money.
But if you are an ordinary investor like me, then the DCA strategy we have discussed many times before is still one of the most suitable strategies. We just need to buy Bitcoin, hold Bitcoin, and wait for selling opportunities. If we can do these three things, then as time goes by, you will see your investment portfolio show positive growth, and any short-term fluctuations in this process can actually be ignored; just continue to eat, drink, and do what you usually do.
For example, the last time I executed a DCA buy was from May 2022 to January 2024, and the time to start executing phased sales is set for December 2024. All of this has been shared in historical articles. We tentatively plan the next DCA execution time to start from 2026, but the specific execution details have not been determined yet; we will consider this later (perhaps there will be new adjustments by then, and we will discuss it again once this year's market stabilizes).
However, based on my long-term observation, the proportion of people who can achieve the above (buy Bitcoin, hold Bitcoin, wait for selling opportunities) seems relatively low. But thinking about it, this seems to be a normal phenomenon; if everyone could do the above, then the rules or gameplay of the market would likely change, because only a small number of people making money in the market is what makes it reasonable. If the vast majority of people can easily make money in a market, then there would no longer be any so-called big opportunities.
Therefore, for most people in the crypto space, if they see their investment portfolios continuously shrink, they are likely to transition from initial excitement to panic, panic to doubt, doubt to pessimism, pessimism to despair, and despair to exit... Ultimately, very few can persist.
When the market rises, almost everyone feels like a genius, while the continuous fluctuations and corrections in the market are the best way to filter out these people (and also a way for rapid asset transfer). In fact, looking back, the crypto market is quite interesting; even when it sometimes experiences devastating blows (like major adjustments or even approaching a crash), it still seems to return with a stronger momentum, continuing to generate new FOMO among more people.
People are always good at forgetting, and the market takes great advantage of this. We all love to talk about cycles, but how many people can really understand cycles?
In terms of the recent market situation, we have actually experienced similar situations many times before, some even more terrifying than the current adjustment. However, at the same time, it is interesting to note that the market seems to understand this well, so those who still insist that the Metaverse, blockchain games, NFTs, and others will continue to rise 100 times during this cycle have suffered heavy losses so far. As the saying goes, history often repeats itself but does not simply repeat; this requires a deeper understanding.
Many people say that learning from past failures or experiences can help them better adapt to the present or future. However, the reality is that the market always finds ways to make you forget the past or continue to lose yourself. This is also why I have always been quite in awe of the market, because I understand that as time goes by, although I can learn a lot of new knowledge and accumulate more experience, if I insist on directly defeating the market, I will ultimately be the one to lose.
Currently, many people are quite emotional, believing that the bull market has ended, and some even shout that BTC will go to zero... This is not the market's fault, but rather that people simply cannot control their emotions. At least, I have never seen anyone with 100 Bitcoins in their wallet shouting online that BTC is going to zero.
At this stage of the market, it seems that many people have been forced to leave due to the previous excessive FOMO. Currently, the so-called largest exchange in the universe, claiming to have over 250 million registered users, has only tens of thousands of participants in its popular TGE events (the latest TGE totaled 369,445 BNB deposits; assuming each person deposited a maximum of 3 BNB, that would amount to around tens of thousands of people).
The so-called king of imitation, ETH, is currently showing increasingly weak performance; not only did this bull market not break previous highs, but it has also continuously fallen to around $1800, and there is even a probability that it might continue to drop to around $1500. Moreover, the so-called comprehensive season of successful imitations has not occurred until now, and the likelihood of it happening next is also decreasing (we have previously discussed this issue in a series of articles on imitation seasons).
The market ruthlessly devastates people's wallets time and again. But since we choose to engage in extremely high-risk investments in a field of extreme risk, we should have a basic awareness before deciding to participate, which is: only use money that you can afford to lose for investments, even if your position is in Bitcoin.
What is doing the right thing?
In simple terms, when you decide to stay in this market, what you need to do is maximize your existing profits (avoiding excessive greed); and when you decide to exit the market, what you need to do is minimize your missed profits (minimizing your regrets).