Author: 0xFacai
Last night, the Dow Jones opened up 300 points before taking a sharp turn, falling 1,100 points in a matter of hours. Between 10:00 a.m. and 3:30 p.m. ET, $1.5 trillion was wiped out of the S&P 500. During the same period, nearly $300 billion was wiped out of the cryptocurrency market cap.
After the crypto market surged on Sunday due to Trump's announcement that he would establish strategic reserves for cryptocurrencies such as SOL, XRP, and ADA, Trump soon "reverse-cleaned" the U.S. stock market, and the crypto market also fell sharply. The entire capital market was once again "violated" by the president. What happened? All this seems to be due to a press conference held by Trump...
Invest in TSMC and loosen restrictions on Russia
Last night, the S&P 500 opened up about 30 points, continuing the trend of Friday. However, shortly afterwards, the Trump administration issued an "investment statement" and market selling pressure began to appear.
Trump announced that TSMC will invest $100 billion in the United States. This investment includes:
1. Build 5 factories in Arizona;
2. Create thousands of jobs;
3. Bringing TSM’s total investment in the U.S. to $165 billion;
4. Create “hundreds of billions of dollars in economic activity”
Trump said in the announcement that this investment plan will promote the United States' long-sought goal of revitalizing the U.S. semiconductor industry. For the capital market, this will undoubtedly exacerbate the Taiwan Strait issue that the current capital market is extremely worried about.
Meanwhile, as President Trump made his statement last night, the Wall Street Journal published a report on Ukraine, saying that the Trump administration has officially stopped funding new weapons sales to Ukraine. According to a subsequent report by Reuters, the United States is also developing a plan to ease sanctions on Russia.
Prior to this, the Ukrainian crisis had reached a stalemate due to the "live quarrel" between the two presidents. At this time, the loosening policy towards Russia was seen as favoritism towards Russia, which was not conducive to the further development of peace talks.
Crazy tariffs
After completing the investment announcement, Trump immediately turned to the question-and-answer session, leading to further panic selling in the market.
First, Trump confirmed that he would impose a 25% tariff on Canada and Mexico starting March 4. Then a reporter asked, "Regarding tariffs, is there still room for Canada and Mexico to reach an agreement before midnight?" In response, Trump said that there was no room for negotiation on tariffs on Mexico and Canada.
Trump then announced that he would impose tariffs on imported agricultural products starting April 2. Worse, he said he would impose tariffs on countries that "devalue their currencies." A few minutes later, the White House issued a statement saying that Trump had signed an executive order to increase tariffs on China to 20%.
This means that tariffs on China have risen by 20 percentage points in 2 months. In contrast, it took Trump two years in his first term to raise tariffs on China to such a high level. Under the tariff stick, the US stock market instantly evaporated $1.5 trillion...
Strategic reserves may be difficult to realize
At the announcement, Trump did not mention the previously mentioned strategic reserve of cryptocurrency, which made the market doubt his sincerity and the real ability of the current government.
Arthur Hayes, founder of BitMEX, mentioned in a tweet some time ago that the fundamental problem with governments hoarding any assets is that they buy and sell assets primarily for political gain, not financial gain. And those who build truly decentralized technologies and applications do not have enough financial resources to play politics at this critical moment in the cycle.
Yesterday, Arthur further stated that he believed the government had no money to buy the crypto assets needed for strategic reserves. "There is nothing new here, just empty talk. Let's wait until the crypto task force gets congressional approval to borrow money or revalue the gold price." Arthur believes that unless Trump passes the "Bitcoin" national reserve, the market will go in a worse direction.
