Author: Bitpush News Mary Liu
The "buy US stocks and make money lying down" bubble seems to be bursting.
Affected by the worsening sentiment of concerns over the US economic recession, the US stock market experienced a "Black Monday" on Monday, with the Dow Jones closing down 2%, the S&P 500 index down 2.7%, and the Nasdaq down 4%. Tesla (TSLA.O) plummeted 15.4%, Apple (AAPL.O) fell nearly 5%, and Nvidia (NVDA.O) fell 5%.
In the Bit market, BTC fell below the $80,000 mark for the second time in three weeks, hitting a low of $77,400 in the past 24 hours, ETH retreated to around $1,800, and the total Bit market cap fell nearly 4%.
The prediction of Arthur Hayes, the co-founder of BitMEX and a well-known figure in the Bit field, seems to be coming true. He had previously predicted that Bit could fall to $75,000, and as the market sentiment deteriorates, this prediction is becoming more credible.
In his latest tweet, Hayes reiterated that Bit could further explore $75,000, and warned that "if it enters this range, the market will experience violent fluctuations." He pointed out that the open interest of option contracts around $75,000 has lit up a "red light", indicating an extremely pessimistic market sentiment.
A few words from Trump wiped out the market, and the shadow of the US economic recession looms
US Treasury Secretary Scott Bessent said in an interview with CNBC on Friday that the US economy may experience a "detoxification period" as the new government cuts government spending.
Trump also responded to the possibility of an economic recession in an interview with Fox News on Sunday, saying the economy is in a "transition period".
Trump said: "I have to build a strong country, you can't just focus on the stock market."
Goldman Sachs has recently significantly lowered its economic growth expectations due to the potential impact of tariffs, further exacerbating the market's pessimism about the US economic outlook. New York Fed data shows that the 1-year inflation expectation in February was 3.13%, and the expectation of a deterioration in the financial situation over the next year was the strongest since November 2023.
CFRA Research Chief Investment Strategist Sam Stovall told CNBC: "We are in the throes of a self-inflicted adjustment, and I say self-inflicted because it's actually a response to the new administration's tariff plans or at least the threat of tariffs, and what that might do to the economy."
Institutional analysis points out that if the concerns about an economic recession caused by the trade war come true, the Fed may start a series of rapid rate cuts in June. The futures market has bet on 25 basis point rate cuts in June, July and October.
Tim Duy, chief US economist at SGH Macro Advisors, warned that if the labor force or financial markets slide, the Fed will face a double risk: to deal with inflation and resist Trump's pressure for rate cuts. However, whether rate cuts can restore market confidence remains to be seen.
Analyst: Bit needs to go through a "mini-recession" before rebounding
Institutional investors are withdrawing from the Bit market, and Bit investment products have seen net capital outflows for the fourth consecutive week. According to data from CoinShares, Bit funds saw an outflow of $867 million last week, with a total outflow of $4.75 billion in the past four weeks. Most of the bearish sentiment comes from the US, with US investors withdrawing $922 million last week.
Zach Burks, CEO of NFT market Mintology, said that due to inflation concerns and the diminishing appeal of Bit as a "Trump trade", Bit could fall to $72,000. He pointed out: "Many investors are withdrawing from Bit, which is the first time they have seen it as a high-risk asset since Trump took office."
Burks believes that Bit's failure to decouple from the US stock market has caused it to lose its function as a store of value. Instead, investors are turning to traditional safe-haven assets like gold. He predicts that although Bit may rebound to $110,000 this year, the market must first go through a "mini-recession" caused by Trump's policies.
Gregory Daco, an economist at Ernst & Young, told CNN that the uncertainty and chaos of Trump's policies are not helpful for the overall economic situation. He said: "The current situation is that the policies are unclear, the policy intentions are unclear, and the policy goals are also unclear, and all these factors together make investors feel uneasy, because it is not clear where the policies will ultimately go."
So, in such an environment, Don't Fight it, Float with It. The real wisdom may not be to fight against the current, but to choose to drift safely with the flow and accumulate strength before the storm comes.
