On February 3, according to CNBC, after US President Donald Trump imposed long-term import tariffs on Canada, Mexico and China, cryptocurrencies saw a defensive trend and plummeted sharply on Sunday.
According to Coin Metrics data, the latest plunge was 7%, to $93,768.66. The CoinDesk 20 index, which measures the 20 largest digital assets by market capitalization, fell 19%. ETH plunged 25% to its lowest level since November.
According to Coinglass data, in the past 24 hours, the entire network had $2.119 billion in liquidations, of which $1.78 billion were long positions and $270 million were short positions. A total of 718,513 people were liquidated globally. The largest single liquidation occurred on Binance-ETHBTC, worth $25.635 million.
On March 12, 2020, the crypto market experienced a brief and rapid plunge. At that time, the number of people liquidated exceeded 100,000. According to Coin data, on March 12, in just 24 hours, the number of people liquidated across the network exceeded 100,000, with the largest single liquidation occurring on Huobi, with a BTC value of about $58.32 million, and the total network liquidation amount was $2.93 billion.
According to CNBC, Trump signed an order imposing a 25% tariff on imports from Mexico and Canada, and a 10% tariff on imports from China, which will take effect on Tuesday, after which US goods began to decline. Trade between the US and these three countries is about $1.6 trillion.
Jim Bianco, founder of Bianco Research, said many are asking why BTC has fallen so much due to the tariff news. Because BTC is a speculative asset. It is 2 times QQQ (if not, it is 3 times). After the stock market opened, the S&P futures opened down 117 points, a drop of 1.9%. Remember last Monday, Deepseek also caused the S&P index to drop 100 points, a drop of 1.5%, and the NDX futures opened down 600 points, a drop of 2.95%.
Jeff Park, head of alpha strategy at Bitwise Asset Management, said that due to the eventual weakening of the US dollar and US interest rates, the ongoing tariff war will be "amazing" for BTC in the long run.
In Jeff Park's view, to understand the current tariff issue, it must be considered from two backgrounds: one is the curse of the Triffin dilemma; the other is Trump's personal goal. By analyzing these two backgrounds, the final result becomes clear: tariffs may only be a temporary means, but the ultimate conclusion is that BTC will not only rise, but rise faster.
First, the Triffin dilemma: the status of the US dollar as a reserve currency gives the US an "exorbitant privilege" in financial transactions/trade, which can have some effects:
1) Due to the need for other countries to hold the US dollar as a reserve in a price-inelastic manner, the US dollar is structurally overvalued;
2) The US must maintain a trade deficit to provide these dollars to the world;
3) The US government can therefore borrow at a lower rate than it should. The US wants to retain the 3rd point, but get rid of the 1st and 2nd points - how to do this? The answer is tariffs.
Recognizing that tariffs are usually a temporary negotiating tool to achieve goals. The ultimate goal is to seek a multilateral agreement to weaken the US dollar, essentially a Plaza Accord 2.0. One hypothetical scenario is that the US explicitly states that countries must reduce their US dollar reserves, while also requiring them to further extend the holding period of US Treasuries.
In other words, Trump is trying to find a "YCC, but not YCC" strategy within the executive branch. Undoubtedly, Baesent approves of this, because he realizes that the legacy Yellen left him is a bag of trash, and Yellen's legacy is that by doubling the debt financing ratio (increasing false liquidity), the Treasury's ability to manage maturities is almost permanently impaired, making the US at the mercy of refinancing when interest rates start to rise. The cost to US taxpayers cannot be underestimated.
So the US is paving the way to achieve the Holy Grail of fiat alchemy: lowering the US dollar and yields.
This brings us to the second point: as mentioned earlier, Trump's top priority is to lower the 10-year yield, because his own wealth depends on it: real estate. His obsession with Powell cutting short-term rates, and then realizing it doesn't work, is the catalyst. Never doubt those simple, transparent, profit-oriented motives, and stand with him. Remember my words: the 10-year Treasury yield will fall, no matter what the cost.
Therefore, the asset to hold is BTC. Against a backdrop of a weakening US dollar and falling US interest rates, some unreliable economists will tell you this is impossible (because they cannot simulate national policies), but the prices of US risk assets will soar beyond your imagination, as the likely rise in costs due to the loss of comparative advantage will force the government to cut taxes significantly. The cost of tariffs is likely to be borne jointly by the US and its trading partners through higher inflation, but the impact on foreigners will be relatively greater. These countries will have to find a way to fend off their weak growth problems, stimulating their economies through monetary and fiscal policies, ultimately leading to currency depreciation. The angry citizens of these countries will experience a mini-financial crisis and seek alternatives.
Finally, Jeff Park said that unlike the 1970s when the world was basically offline, today we are not only online, but on-chain. So while the two sides of the trade imbalance equation need BTC for two different reasons, the end result is the same: higher and faster - because we are at war.
In addition, investors view $90,000 as a key support level for BTC, and some warn that if the cryptocurrency falls significantly below this support level, the price will further correct to $80,000.
BTC is currently down about 16% from its all-time high of $109,350.72 set on January 20. Experienced crypto investors and traders have become accustomed to around 30% corrections during bull markets over the years.
