Source: Talk Outside the Box

Let's start with a brief review of the recent turmoil:

On March 2 (Beijing time), Trump posted on Truth Social that the US will advance a crypto strategic reserve including BTC, ETH, XRP, SOL, ADA, and ensure the US becomes the world's crypto capital.

Buoyed by this sudden news, the market started to surge rapidly, with BTC jumping from $85,000 to $95,000, ETH rising 18%, XRP 38%, SOL 29%, and ADA soaring 80%.

However, this rapid rise did not last long. With the opening of the US stock market on March 3, coupled with the impact of tariff news, Bitcoin and various Altcoins also began to plummet quickly. In just about a day, the market had completely erased all the gains triggered by Trump's "strategic reserve" news.

As there is an expected White House crypto summit on March 8 (Beijing time), the market has been fluctuating in the past few days. However, news has emerged today (March 7, Beijing time) that Trump has already signed an executive order to formally establish a US strategic Bitcoin reserve, as shown in the image below.

But after this news spread quickly, the market has instead re-entered a rapid downward trend, with Bitcoin falling 6% in just half an hour, as shown in the image below.

Here, we may need to continue to think about a few questions:

Are the recent market surges and plunges an illusion? Or are whales deliberately manipulating the market and buying in at low prices?

The US has bestowed Bitcoin with a national reserve status similar to gold, which should strengthen Bitcoin's legitimacy and value support in the long run, but why is the market reacting with a rapid decline?

Building on our previous articles, let's continue to discuss this topic simply:

1. About the Bitcoin strategic reserve

To be honest, a few years ago, I couldn't even imagine that Bitcoin could be included in the US strategic reserve. I only thought that if Bitcoin could be approved for a spot ETF, that would be a huge milestone.

But since Trump's election victory, we've mentioned in previous articles that the US crypto strategic reserve has become a matter of time, not a question of whether it will happen.

From a long-term perspective, the world's most developed and influential country including Bitcoin in its strategic reserve is equivalent to bestowing Bitcoin with a national reserve status similar to gold (although the US's gold reserves have already lost their original significance). This will certainly enhance Bitcoin's legitimacy and value support, and also be beneficial for the healthy development of the crypto industry (rather than completely unregulated wild growth, of course, healthy development also means that the opportunities for ordinary people to get rich will become fewer and more difficult).

Of course, you can also view the US Bitcoin strategic reserve as a new conspiracy or scam, and I won't refute that - everyone can have their own perspective on the issue.

But from a short-term speculative perspective, the rapid market decline today after the news that Trump has officially signed an executive order to establish a Bitcoin strategic reserve may be due to:

- The market interpreting the news as a fait accompli

It is common in the investment field to say that good news is bad news when it is realized. Today's news can be understood as a realization of the US Bitcoin strategic reserve, so it may have triggered some speculative selling.

- Discrepancy between expectations and actual policy

Many people expected that once the Bitcoin strategic reserve is established, the Trump administration would use fiscal funds to buy more Bitcoin. But the news today shows that the executive order Trump signed mainly states that the source of the Bitcoin reserve funds is limited to forfeited proceeds, and will not increase the tax burden on taxpayers. This was directly interpreted by people as the Trump administration not directly investing new funds to purchase Bitcoin.

Although the public information also mentions that "the Treasury and Commerce Departments can develop plans to acquire more Bitcoin without increasing the tax burden on taxpayers", it still fails to prevent people's disappointment. The greater the expectation, the greater the disappointment.

Of course, the above are just some relatively intuitive reasons. Market declines are often determined by a combination of factors, such as the narrative, economic, and policy aspects we mentioned in our previous articles. Short-term market movements are more of a direct reflection of changes in people's emotions influenced by news.

Since there is a White House crypto summit tomorrow (March 8, Beijing time), we don't know what new policy news may emerge, and this will also have an immediate impact on the short-term market performance. So we should continue to pay attention.

But if we take a longer-term view, as the US crypto strategic reserve policy is implemented and advanced (which also takes time), it can be foreseen that some large whales/institutions will inevitably continue to accumulate more Bitcoin positions, and even some other countries may also announce their own crypto strategic reserve plans this year or next.

Remember the quote we shared in an article two years ago: the two best times to own Bitcoin are ten years ago and now. I still choose to say this today.

2. About the market's outlook

In the previous article (March 5), we mentioned a global liquidity issue, as shown in the image below.

In fact, since last year, the market (market participants) has been expecting the end of the US quantitative tightening (QT), but based on the latest FOMC meeting results, we may not see any such opportunities until as early as June this year. During this process, it is undoubtedly the biggest negative factor for high-risk asset classes like crypto.

According to public data, the US government's debt has now reached a ceiling of $36 trillion, which seems to mean that the government cannot borrow more money until Congress raises or suspends the limit. Although Musk's efficiency department has been working to reduce government spending since Trump took office, the massive US government still needs to spend more money to maintain its operations. So what will they do?

Here we notice the data on the TGA (Treasury General Account), which is the checking account the US Treasury Department has set up at the Federal Reserve. As of the time of writing, the TGA still has nearly $522.8 billion. As shown in the image below.

Combining the data we mentioned earlier, the US government may be spending from the TGA account to maintain operations and provide liquidity support. At the same time, I've also recently noticed online rumors that the risk of a US government shutdown is increasing, which may also be based on the considerations we just discussed. But I don't think a government shutdown will happen under Trump, the probability of a full-scale occurrence is not high.

The fundamental of any market is liquidity. As long as there is liquidity, there are opportunities.

Except for the part of TGA where liquidity continues to be maintained, we have also seen some changes in other policy aspects related to the crypto field recently, which we have already described in the previous article (March 5th) and will not repeat here. As shown in the figure below.

The continued relaxation of SEC policies, coupled with the increasing number of Altcoin ETF applications submitted or entering the review stage this year, compared to previous years, we seem to have never encountered such a "good" regulatory environment. This is also one of the reasons why I have consistently maintained an overall optimistic outlook for the first quarter - second quarter of this year in my previous articles (of course, I do not rule out the possibility of any new black swan events occurring during this period, which would be a different story).

In simple terms, the first White House Cryptocurrency Summit on March 8th, the first Cryptocurrency Roundtable on March 21st, and the potential approval of more new Altcoin ETFs in the second quarter of this year... In the long run, the industry is getting better and better. In the short term, however, people seem to be increasingly pessimistic. This is a very interesting phenomenon.

Of course, this pessimistic sentiment is also very understandable, with the main issues including:

- Severe dilution under insufficient liquidity

Remember in the article on January 20th, we also mentioned that the sign of the end of this bull market phase is likely to be the issuance of MEME by celebrities, but I didn't expect that the celebrity leading the issuance of coins would be the President of the United States. As shown in the figure below.

In a market where liquidity is already insufficient, the current cycle has given birth to a massive number of new projects, a large number of VC projects continue to unlock and sell pressure, and liquidity is constantly being drained, all of which have exacerbated the violent fluctuations in the market, which is one of the problems leading to the pessimistic sentiment.

- Concerns about economic recession

In recent weeks, we have continued to see reports and data on concerns about (US) economic recession, such as the latest forecast report (GDPNow model) released by the Atlanta Fed last week (February 28th), which shows that the US economy will shrink by 1.5% in the first quarter. If this becomes a reality, it will be the first quarterly decline in the US economy since the first quarter of 2022.

For example, the recently released US manufacturing PMI data was also lower than expected (US manufacturing PMI was 50.3% in February 2025, down 0.6 percentage points from the previous month), also indicating that the US economy is slowing down.

Looking at the CPI and PPI data together, the US seems to be facing the problem of stagflation. And it is precisely because of the problem of stagflation that the Fed cannot directly continue to cut interest rates, as interest rate cuts usually also increase the risk of inflation, and of course they cannot raise interest rates again, as interest rate hikes will further slow down the economy. This seems to be a dilemma, and this kind of situation leaves the market with overall turmoil and unease.

The macroeconomic situation was already facing a dilemma, but after the mischievous Trump took office, he started the tariff war again, which undoubtedly will also continue to drive up the risk of inflation, especially for high-risk assets like cryptocurrencies, which is undoubtedly a pessimistic fundamental factor.

So, should the market outlook be bullish or bearish going forward?

I don't know. In fact, I think in the short term, whether to be bullish or bearish is not important, ultimately it still depends on your own position and trading style.

If we look back, from the end of last year to now, BTC has experienced a sustained and repeated fluctuation in the range of $70,000 to $100,000. In theory, the market should have already digested the expected positive or negative impacts of various news, and although many Altcoins have been bloodbath, BTC as a whole still looks relatively "healthy". Perhaps BTC may continue to fall to the $70,000 level, but I will definitely continue to hold my coins and watch, and strictly follow my own trading discipline and established goals.

The market is actually very interesting, usually most people tend to be bearish at the bottom and bullish at the top. As for myself, when people generally see BTC at $70,000 or even lower, I will choose to see $100,000 or even higher. Because I have enough time and patience, when more and more people choose to give up due to pessimism, I myself am actually more excited about the potential performance of the market going forward.

The reason why I read news, watch charts, etc. is mainly for the need to write articles (self-media), but in terms of trading (holding BTC), I can actually go for a few months without looking at the news, and only occasionally look at the weekly charts. When you simplify the seemingly complex short-term things through the time dimension and quantification dimension, the logic here is actually not complicated, and you don't even need to watch the market or read the news every day.

In the end, it's still the same old saying, the market is uncontrollable, the only thing we can control is our own position. Most people only have the ability to make slow money, but always hope to make quick money, if they cannot reasonably recognize themselves, then the most likely outcome is to lose money. In the short term, the market will still face various uncertainties, but in the long run, I (at least myself) will continue to maintain awe of the market while maintaining overall optimism.

Finally, let's review the current Bitcoin holdings of major institutions and governments. As shown in the figure below.