Trump has initiated a trade war, and the smoke of battle is rising, leaving the crypto world devastated.
I think it is necessary to write a long article, both to sort out my recent operations and to analyze the current situation for everyone, providing an additional reference. As an old player who joined the group in 2017, having experienced 94, 312, and 519, I no longer remember the extent of the drop or the specific circumstances, but that feeling of panic seems etched in my mind. The drop on April 8, 2025, compared to previous significant drops, can be said to have 'the flavor of the past.'
1. Brief Analysis of the Plummeting Data: A Comprehensive Correction from BTC to Altcoins
Bitcoin has dropped from nearly $110,000 to below $75,000, while the $70,000-$75,000 range is significant as it was last March's high and also the peak of the last bull market in November 2021. Firstly, the significance of this support range is paramount; secondly, Bitcoin has seen a significant influx of capital after the ETF, along with strategies like MicroStrategy and Tether's dollar-cost averaging. This year's overall performance during the correction has been strong; thus, falling over 30% from relative highs is also considerable.
Next is Ethereum, which performed better than Bitcoin in the previous cycle and has crossed two bull-bear cycles, becoming a consensus in the crypto world. However, this has also led to the vehicle being too heavy, coupled with a lack of new value growth points, resulting in relatively poor performance this round. Not only has its growth lagged behind Bitcoin, which has surged nearly 7 times from the previous bear market low of $16,000, while Ethereum rose from $1,100 to $4,100, with an increase of less than 4 times. Even more frustrating is the drop, which has already retracted 65%. If it drops a bit more, it will return to the low point of the previous bear market, which is hard to believe.
As for altcoins, this round is even worse. I myself, due to impulse during the downturn, bought some AI sector assets, which have now basically halved. Fortunately, my position is not large, but those who bought altcoins at high points have seen individual coins' market caps shrink by 90% or even 95% or more, which is lamentable. Crypto assets seem to have gone through another bubble burst, but the difference is that this time the bubble that was inflated was not large.
2. The Black Swan Approaches: Why Trump's Tariffs Shake the Crypto World?
Trump's tariff policy has basically reached a black swan level, as all countries with trade deficits have been put on the list. Due to China's countermeasures, it was announced today that tariffs will be raised to 104%, a level that means a complete severance of trade relations. Of course, in the short term, since tariffs have been implemented, it is impossible to immediately retract them, so it depends on how to respond. Current prices definitely reflect expectations of worse scenarios, which means the US-China trade war is continuously escalating. As for other countries, it seems likely they will yield, being cut by Trump's knife to acknowledge defeat.
The US stock market has already shown signs of a bear market, and even the price of gold has retracted, illustrating how severe the panic sentiment is in the current capital market. If the tariff war escalates, trade barriers will fundamentally restrict industrial development, and the next step will definitely be to limit financial free flow. Currently, the vast majority of people are inclined to hold cash and maintain liquidity. Due to the high correlation of Bitcoin with US stock prices over the past two years, it naturally affects the crypto world, which is also a high-risk market.
However, will such high tariffs really continue? I think no one knows, but what is certain is that the current market decline contains expectations of continuous deterioration to a certain extent. In my view, Trump's tariff policy is merely a means, not an end, and the likelihood of long-term maintenance is not high. Just as Trump said, he admits he does not want to see the US stock market decline, but this is 'a necessary medicine' that must be taken to achieve a certain purpose. Since it is taking medicine, it will stop once the illness is cured. As for whether his aggressive tariff policy is to make 'America Great Again' or a disguised sanction against East Asia, the distinction is not great; the core is the sustainability of this policy and how far it can go.
3. The Essence of the Crypto World: Group Mentality Under Speculation and Panic
In recent days, I have been pondering a question: why does the tariff stick also bring down the prices of crypto assets? Tariffs restrict trade circulation, affecting the real economy, while the crypto world still belongs to the virtual economy, with almost negligible connection to the real economy. If I had to say, it may be the correlation between Bitcoin prices and the US stock market, or that crypto assets also belong to risk assets, where a decline in economic vitality will dampen investment expectations. However, no matter what, the direct impact of tariffs on the crypto world should not be significant.
Moreover, after experiencing this round of increase, the liquidity within the circle is abundant, while macro liquidity depends on the pace of the Federal Reserve's interest rate cuts. High tariffs are likely to plunge the US economy into recession, which would be helpful for interest rate cuts. Therefore, the decline in the crypto market, in my view, is actually exacerbated by excessive panic, and panic will lead to mispricing of prices. Price depressions generally occur during this stage, and maintaining clarity and a degree of independence is crucial.
What kind of place is the crypto world? In my view, it is an investment market highly concentrated on speculation, a crucible where faith and speculation coexist. In a bull market, any project, as long as it gets listed on a major exchange and is a hot concept, can easily achieve a market cap of hundreds of millions of dollars, even an air meme can reach hundreds of millions in valuation. In a bear market, as the tide recedes, a few million dollars can wipe out a hundred million in market cap. At this time, everyone realizes that the speculative sentiment under FOMO is too severe, and all they think about is investing, just wanting to find 'value' targets. However, we often make a mistake: we talk about investment when we should speculate and talk about speculation when we should invest.
4. Price vs. Value
Prices always swing around value.
Why do people say Bitcoin can be dollar-cost-averaged at any time? Because its value is still in a growing long cycle, more people will realize its scarcity and value storage function. It is precisely because the price always swings around its value, and Bitcoin's value continues to grow over the long term, that the price will exhibit a translational trend while swinging.
It must be acknowledged that Ethereum, under the FOMO sentiment of the bull market, has not been able to break through the $4,000 high, which means it is not worth $4,000. The decline under the pull of value is thus reasonable. However, at present, the fundamentals of Ethereum have not changed significantly compared to before. Decentralization has not been affected, and the value logic is still based on that of a supercomputer, with DeFi being the prominent ecosystem. If I must say, activity has somewhat decreased, gas fees have declined, and the overall locked value has decreased compared to the bull market.
Even so, I believe that due to the accumulation of FUD sentiments and the impact of the trade war, theoretically, the price of ETH has deviated from its value center and is swinging toward undervaluation. Has Ethereum's value increased compared to the last bull market? Objectively speaking, not much, mainly because there have been no new innovative applications after DeFi exploded, but technological iterations have never stopped. The future rise of Ethereum depends on new value growth points. Currently, one is the development of applications within the ecosystem, and another to look forward to is the ETF, which is an important point of value recognition.
The short-term impact on prices, the most noteworthy point, is the impact of emotions. Today's fear & greed index is 18, which falls into the extremely fearful range. According to on-chain data, a wallet suspected to be related to the Trump family crypto project WLFI sold 5,471 ETH at an average price of $1,465. This address previously spent about $210 million to buy 67,498 ETH at an average price of $3,259, resulting in a paper loss of $125 million. Regardless of the authenticity of the news, the panic in the market is certainly palpable to everyone. At this moment, I can only think of that well-known saying: when others are fearful, I am greedy.
Finally, a reminder: this article is a personal record after fully investing in Ethereum at $2,000. Looking back, perhaps I was wrong, or perhaps I am on the right path—but at least, at this moment, I am clear-headed.
Investment is a high-risk behavior, especially in cryptocurrencies. I do not recommend using any leverage; spot investments should primarily come from idle funds. One must first learn to maintain composure amidst fluctuations to navigate cycles in the long run.