When chatting with many OGs, they all lamented that the market changes in 2024/2025 were unpredictable, and many veterans couldn't make money. There is a more interesting point of view, that is, 17/18 is a "community-driven market", that is, the new asset issuance paradigm creates a wealth effect; 20/21 is a "technology-driven market", that is, new asset gameplay (DeFi/NFT) creates a wealth effect; 2024/2025 is a "policy-driven market" (some people also say this is a "policy bull", hahaha), that is, market changes depend on policy changes.
This article mainly focuses on recent policy-driven events, or in other words, the impact of public policy information on currency prices (mainly discussing the magnitude). As for the memes posted by Trump and his wife, they are not included in this category.
Before this, there was a very important assumption that people would become numb to signals that appear "continuously" for a long time (the reasons include being smoothed/monitored by various strategies, people's perception becoming dull, etc.). For example, if you can face the sea every day, over time, your excitement about seeing the sea will decrease, and you may even get used to it (in economics, this is called diminishing marginal benefits).
After the ETF was approved in 2024, in addition to the traditional technical indicators such as exchange funding rate, lending rate, volatility, K-line, etc., the market will use the ETF's net inflow/outflow data of the next day as an important reference indicator for today's price trend. If the ETF's net inflow/outflow data is regarded as public information, how does the market view this data? And will this data significantly affect the price?
Taking ETH as an example, the price of ETH is positively correlated with the inflow/outflow of ETFs (if there is a net inflow on the previous day, the probability of price increase the next day is higher, and vice versa)
The correlation between BTC’s price movement and the net inflow/outflow of ETFs is not so obvious, especially after Trump’s victory in November, the correlation of this part of the trend prediction has gradually weakened.
Given that the data is relatively intuitive and readable, this article will not show regression analysis. Overall, the market's sensitivity to public market information (referring to this kind of intuitive market information) will gradually decrease, but this does not mean that this information is invalid.
Here is a summary of Trump’s recent comments (tweets) on tariffs:
February 1, 2025 : Trump signs an executive order imposing 25% tariffs on Canadian and Mexican goods and a lower 10% tariff on Canadian energy imports, with the tariffs set to take effect on February 4, 2025.
February 13, 2025 : Trump announces a 25% tariff on all foreign steel and aluminum products, scheduled to take effect on March 12, 2025. "Reciprocal" tariffs will be imposed on all foreign imports starting April 2, 2025.
March 4, 2025 : Trump's previously announced tariffs on Canada and Mexico officially take effect at 12:01 a.m. Eastern Time.
March 7, 2025 : Trump announces new tariffs on Canadian dairy and lumber, set to take effect on March 11, 2025. (This date is also the White House Crypto Summit)
March 11, 2025 : Trump announces that he will impose an additional 25% tariff on Canadian steel and aluminum (to 50%), which is expected to take effect on March 12. In addition, Trump also asked Canada to remove tariffs on US dairy products.
Directly on the data:
Note: There is a view that the decline on March 7 may also be related to the market's overly high expectations of "Bitcoin reserves"
As the old saying goes, over and over again, the third time will be enough. Combining the rise and fall of BTC and ETH at these time points. From the data, the first (February 1) and third (March 4) tariff topics had the largest reaction, the second (February 13) and fourth (March 7) reactions were smaller, and the fifth (March 11) even had an increase, but does this mean that the market has become desensitized to Trump's "tariff tricks"?
Combined with the inflow/outflow analysis of ETFs:
As early as before March 1, BTC ETF had already seen a large-scale outflow, presumably for risk aversion or exit, so traders who were bearish on the market or resisted tariff fluctuations had left one after another, which may explain why existing ETF holders are less likely to be affected by tariff issues. After all, those who wanted to withdraw have already left.
Next is the analysis of March 4 and 7. Although the tariffs on March 4 were within market expectations (Trump said in February that there would be a round of tariff sanctions in early March), the market reaction was more intense due to the Bank of Japan's interest rate hike, especially the BTC trend, which was more volatile than on February 1. The tariff remarks on March 7 certainly had an impact, but that day was also the day when the news of the Bitcoin Summit and strategic reserve was released, and the market's expectations > the actual policy.
Just as people living by a river will ignore the sound of water, people will become numb and insensitive to information that is presented for a long period of time. However, Trump’s tariff issue has not yet reached the threshold for a long period of time. The reaction on March 11 may be a manifestation of "desensitization", but the deeper reason is more likely that safe-haven funds have withdrawn, and those left in the market are traders who have already priced in the "tariff".
There is no numbness or desensitization in the market. These are all carefully calculated risks.
So do you still care what Trump says?
