The US encryption reserves are struggling to reverse the market decline, and BTC has once again fallen below the $90,000 mark.

The market is at a critical point where multiple policy storms and uncertainties are intertwined.

Author: ChandlerZ, Foresight News

On the evening of March 3 to the morning of March 4, against the backdrop of dense clouds hanging over the global macroeconomy, Trump's announcement of including cryptocurrency in the U.S. strategic reserve plan failed to reverse the overall market downturn. The news of Trump's announcement of including cryptocurrency in the strategic reserve initially sparked a brief frenzy in the market, but quickly returned to calm. After a brief rise, Bitcoin fell by 13%, almost completely erasing its gains; Ethereum soared to $2550 before falling to nearly $2000, and even dropped below recent lows. Other tokens that had previously led the rally, such as SOL, also gave back most of their gains.

At the same time, the three major US stock indexes also plummeted sharply, with the S&P 500 falling by 1.76%, the Nasdaq by 2.64%, and the Dow Jones turning from a rise of nearly 200 points to a plunge of over 600 points. As representatives of risky assets, tech stocks have suffered more severe selling pressure, with NVIDIA's stock price plummeting by nearly 9%, and the Magnificent 7 index of the seven US tech giants dropping by 3.45%. Funds have rapidly exited high-risk assets and shifted to traditional safe-haven assets, forming a typical safe-haven trading pattern.

CoinMarketCap data shows that the total market value of cryptocurrencies has once again fallen below 3 trillion US dollars, hitting a new low since November 2024. The scale of liquidation in the derivatives market has significantly expanded. According to Coinglass statistics, the total amount of liquidation in the entire network within 24 hours reached 1.068 billion US dollars, with Bitcoin contract liquidation at 38,600 US dollars and Ethereum contract liquidation at 20,700 US dollars.

Tariff disputes trigger market panic

Trump reiterated the 25% tariffs on Canada and Mexico from March 4 and made it clear that "there is no room for negotiation." Trump also mentioned that from April 2, countries that impose tariffs on U.S. products will face equal retaliatory tariffs. Canada is ready to impose retaliatory tariffs on $155 billion worth of U.S. goods. In a rare outright opposition to the policy, Buffett said tariffs were "in some ways an act of war" that would trigger inflation and hurt consumers.

The U.S. economy is currently facing a rare state of macroeconomic fragility. The Atlanta Fed's GDPNow model slashed its first-quarter GDP contraction forecast to 2.8% from 1.5%, a nearly double cut that is well beyond normal economic forecast revisions and suggests that economic fundamentals are deteriorating at an accelerating pace. At the same time, manufacturing activity has almost stagnated, while raw material prices have hit a two-year high, constituting a typical precursor to stagflation. This combination of stagnant growth and inflationary pressures has historically been a nightmare for macroeconomic policymakers, as it undermines the effectiveness of conventional monetary policy tools. Against this backdrop, Bridgewater founder Dalio warned that if the United States does not reduce its deficit, it will face a debt crisis within three years.

The United States' suspension of military aid to Ukraine adds uncertainty

According to the U.S. media report cited by Xinhua News Agency, Trump has ordered a suspension of all military aid to Ukraine until Ukrainian leaders show sincerity in reaching a peace agreement between Russia and Ukraine.

The decision came after a heated altercation between Trump and Zelensky in the Oval Office. The Wall Street Journal reported that the Trump administration has stopped funding new arms sales to Ukraine and is considering freezing arms shipments in U.S. stockpiles, which could seriously affect Ukraine's ability to fight at a critical moment in the fight against Russian forces.

In response to the change in US policy, European leaders have agreed at the London summit to form a "coalition of volunteers" to develop a peace plan for Ukraine submitted to Trump, which will include the provision of ground troops and military assets. The UK has also announced new military aid packages, including £1.6 billion in anti-aircraft missile procurement support and a £2.26 billion defence loan deal.

This shift in policy may herald a fundamental change in the US policy towards Ukraine, as well as a potential restructuring of the international security landscape. The market's expectation of an escalation in future geopolitical conflicts has prompted investors to withdraw funds from risky assets such as US stocks and crypto assets, and seek refuge in safe-haven assets, resulting in simultaneous declines in these two major markets.

At the same time, the change in this security pattern suggests that traditional macro crises may be intertwined with international political risks, forming a multi-level risk system. The decision by the United States to suspend military aid to Ukraine may trigger more defensive measures within the region, and the resulting political and economic uncertainty will further impact the global financial markets. Faced with the deteriorating external environment, investors find it difficult to judge which asset class can better avoid risks, and therefore choose to wait and see. The market liquidity decreases, further exacerbating the simultaneous decline of the US stock market and the crypto market.

Critical Point of Market

The market is currently at a tipping point where multiple policy storms and uncertainties are intertwined, and investors' expectations of global risks have risen significantly under the impact of the tariff turmoil and the suspension of U.S. military aid to Ukraine. This expectation has created a risk-off sentiment for funds, which has led to a simultaneous decline in traditional risk assets such as U.S. stocks and crypto asset markets, and market confidence has been hit hard. At the same time, heightened geopolitical tensions have cast a shadow over the crypto asset market in the near term, raising doubts about the macroeconomic outlook and dampening liquidity, which has led to a rise in risk premiums.

Against this background, there are multiple possibilities for the future trend of the cryptocurrency market. On the one hand, the United States will host its first cryptocurrency summit on March 7, where Trump's speech and further elaboration on the future strategic Bitcoin reserve plan are expected to reignite market enthusiasm, sending positive signals to some cryptocurrencies. On the other hand, although Trump's proposal of a 'National Strategic Bitcoin Reserve' last year attracted attention, the specific implementation by the U.S. government is still unclear, and its internal logic and feasibility are widely questioned. If the U.S. establishes reserves by retaining confiscated bitcoins in the future, its supportive role in the market may gradually become apparent. However, whether this model can balance political manipulation and market-driven development still requires observation of policy details and implementation efforts.

Overall, the future dynamics of the crypto market will seek a balance between policy shifts, the international security situation, and the global macroeconomic environment. In the medium to long term, if the global economic situation stabilizes and the policy implementation has a clear direction, crypto assets may be expected to gradually recover from the current shock. However, at this stage, the market is still facing high uncertainty, with risk premiums and volatility both at high levels.