Last night, the Dow Jones index opened with a 300-point rise, but the situation quickly reversed, plummeting 1,100 points within a few hours. Between 10:00 AM and 3:30 PM Eastern Time, the market capitalization of the S&P 500 index evaporated $1.5 trillion. At the same time, the cryptocurrency market capitalization shrank by nearly $300 billion.
After the cryptocurrency market soared on Sunday due to Trump's announcement of establishing strategic reserves for cryptocurrencies such as SOL, XRP, and ADA, Trump quickly gave the US stock market another "reverse wash," and the cryptocurrency market also suffered a major decline, with the entire capital market being "violated" again by the President. What exactly happened? It all seems to stem from a press conference held by President Trump...
Investing in TSMC, Easing Restrictions on Russia
Last night, the S&P 500 index opened with a rise of about 30 points, continuing the trend of the previous Friday. However, shortly after, the Trump administration issued an "investment statement," and market selling pressure began to emerge.
Trump announced that TSMC will invest $100 billion in the United States, including:
1. Establishing 5 factories in Arizona;
2. Creating thousands of jobs;
3. Bringing TSMC's total investment in the US to $165 billion;
4. Creating "hundreds of billions of dollars in economic activity"
In the announcement, Trump said this investment plan will drive the long-term goal of revitalizing the US semiconductor industry. For the capital market, this will undoubtedly exacerbate the Taiwan Strait issue, which is currently a major concern.
At the same time, while Trump was making his statement last night, The Wall Street Journal "timed" the release of a report on Ukraine, stating that the Trump administration has officially stopped funding the sale of new weapons to Ukraine. According to a subsequent Reuters report, the US is also drafting a plan to ease sanctions on Russia.
Prior to this, the Ukraine crisis had reached an impasse due to the "live argument" between the two presidents. The policy of easing restrictions on Russia is now seen as a bias towards Russia, which is not conducive to further peace talks.
Crazy Tariffs
After completing the investment announcement, Trump immediately turned to the Q&A session, causing further panic selling in the market.
First, Trump confirmed that he will impose a 25% tariff on Canada and Mexico starting March 4. Subsequently, a reporter asked, "Regarding tariffs, is there still room for Canada and Mexico to reach an agreement before midnight?" Trump responded that there is no room for negotiation on tariffs against Mexico and Canada.
Trump then announced that he will impose additional tariffs on imported agricultural products starting April 2. Worse, he said he will impose tariffs to sanction countries that "engage in currency devaluation." Minutes later, the White House issued a statement saying that Trump had signed an executive order to raise tariffs on China to 20%.
This means that tariffs on China have increased by 20 percentage points within 2 months. In comparison, it took Trump two years in his first term to raise tariffs on China to such a high level. Under the onslaught of the tariff stick, the US stock market instantly evaporated $1.5 trillion...
Strategic Reserves Unlikely to Materialize
At this press conference, Trump did not mention at all the previously mentioned cryptocurrency strategic reserves. This has led the market to doubt the sincerity and the true capabilities of the current administration.
In a recent tweet, BitMEX founder Arthur Hayes mentioned that the fundamental problem with the government hoarding any asset is that they buy and sell assets primarily for political interests, not financial interests. Those who are building truly decentralized technologies and applications do not have enough financial power to play politics in this critical moment.
Yesterday, Arthur further stated that he believes the government does not have the money to purchase the required cryptocurrency assets for strategic reserves, "There is nothing new here, just empty talk. Let's wait until the crypto working group gets congressional approval to borrow money or revalue gold." Arthur believes that unless Trump does it through a "Bitcoin" national reserve, the market will head in an even worse direction.
