Trump's social media post wiped out $2 trillion in market value, causing global markets to swing violently amid trade panic and a rush to safe havens. "No need to worry, everything will eventually get better!" U.S. President Trump attempted to soothe the markets over the past weekend through social media. However, investors remain on edge. His threatening remarks regarding trade relations on Saturday triggered a global market earthquake, leading to the worst drop in U.S. stocks since April, with $2 trillion in market value evaporating. In early trading on Monday, spot gold surged to $4,060 per ounce, setting a new historical high. This market panic triggered by Trump's trade policies is reshaping the global asset allocation landscape.
01 Market Shock, Risk Assets Rebound Across the Board
● On Monday morning in Asia, market sentiment showed a clear reversal. U.S. stock index futures rebounded from Friday's sharp decline, with S&P 500 futures climbing nearly 1%.
● The commodities market also welcomed a rebound. WTI crude oil futures opened up more than 1% on Monday, trading at $59.68 per barrel. New York copper rose over 2%.
● The digital currency market experienced a strong rebound over the weekend. Bitcoin broke above $115,000, rising 4.25% in the past 24 hours.
● Meanwhile, traditional safe-haven assets showed divergence. Spot gold erased an opening drop of $20 and remained above $4,030 per ounce, while the yen and other safe-haven assets weakened significantly.
02 Trade Tensions, Changing Dynamics in U.S.-China Game
The recent tariff escalation was not without warning. After TikTok reached a preliminary agreement in September, the U.S. continued with "small moves."
On September 29, the U.S. introduced the strictest 50% equity penetration control rules in history, further tightening technology restrictions. Subsequently, China escalated its export controls on rare earths and key technologies. In response to U.S. threats, the Chinese Ministry of Commerce clearly stated: "Using high tariffs as a threat is not the right way to engage with China." The spokesperson emphasized that China is "unwilling to fight but not afraid to fight" regarding the tariff war.
Compared to the trade tensions in April, this round of negotiations exhibits different characteristics. Minsheng Securities pointed out that the biggest difference from April is China's "calm amidst the chaos" response—there is no tit-for-tat escalation, but rather an explanation of the situation and a clear statement of bottom lines.
The Trump administration has also left "room for maneuver" in its strategy, setting the tariff effective date for November 1, leaving a valuable window for negotiations.
03 Market Mechanism: The "TACO" Strategy Resurfaces in the Crypto Market
The TACO trading strategy is an "event-driven" short strategy that has been popular on Wall Street and in the crypto space since 2025, named after "Trump Always Chickens Out." The "TACO" trading strategy has become active again in the crypto market. This strategy is based on Trump's behavior pattern of "first applying strong pressure and then compromising," betting on the rebound opportunities after a short-term market crash.
● Core Mechanism: Trump's tariff threats often serve as leverage before negotiations, ultimately leading to agreements through concessions, creating a "shock-rebound" trading window. For example, after the tariff escalation in April, the Trump administration repeatedly delayed the implementation or exempted certain goods (such as refined copper), confirming that a 100% tariff lacks economic feasibility and is more of a political stance.
● Applicability to the Crypto Market: The high leverage characteristics of the crypto market amplify "TACO" opportunities. This week, Trump's tariff remarks triggered a 16% drop in Bitcoin (from $121,420 to $102,000), but history shows that such events often lead to rapid rebounds. The March 2025 tariff announcement caused Bitcoin to drop to $97,513, followed by a strong recovery during the "Uptober" and "Moonvember" phases.
● Current Signals and Market Reactions: Investors have gradually become immune to the "tariff stick." On October 13, Bitcoin quickly rebounded 4.25% to above $115,000 after an initial drop, with a total liquidation of $630 million across the crypto market, but panic selling did not persist.
● On-chain data indicates that whales are accelerating their positions during the downturn: for instance, the "7 Siblings" address borrowed $40 million USDC to buy ETH, while some institutions increased their holdings in Bitcoin ETFs (with a weekly inflow of $2.7 billion). This shows that under the "TACO" strategy, short-term declines are viewed as buying opportunities.
04 Capital Flows: High Cuts Low and Defensive Layouts in the Crypto Market
Funds within the crypto market are shifting from overvalued sectors to undervalued areas, while defensive assets are gaining favor.
● Leverage Cleansing and Fund Transfer: Within 24 hours of Trump's tariff announcement, the total liquidation in the crypto market reached $18.28 billion, with mainstream coins (such as Bitcoin and Ethereum) dropping over 10%, while altcoins generally collapsed by 70%-90%. This prompted funds to shift from high-leverage speculative assets to more stable underlying assets.
● ETF and Institutional Layout: Bitcoin ETFs continue to attract capital (with a net inflow of $2.7 billion this week), with funds shifting from small and medium tokens to large-cap coins and compliant products. At the same time, investors prefer assets with "anti-fragile" characteristics:
● Bitcoin and Gold Correlation: The 30-day correlation between Bitcoin and gold turned positive, with both becoming safe-haven choices, as Bitcoin followed gold's rise when it broke above $4,050.
● Stablecoins and DeFi Platforms: Amid political uncertainty, trading volumes for decentralized finance protocols like MakerDAO's DAI surged, with some funds using them as temporary safe havens.
05 Outlook: Key Nodes and Balance in the Crypto Market
The crypto market faces both short-term volatility and long-term opportunities, with the core focus on the evolution of trade negotiations and macro policies.
● Short-term (1-2 weeks): Event-driven and sentiment recovery
APEC Summit Setting: The APEC summit on October 31-November 1 is a key node. If U.S. and Chinese leaders meet to ease tensions, the crypto market may rebound quickly; if tariffs take effect on November 1, attention should be paid to the exemption list (such as consumer electronics-related mining companies).
Data Delays Amplifying Volatility: The U.S. government shutdown has delayed the release of September non-farm payroll and CPI data, creating uncertainty in the Federal Reserve's policy path (the October meeting may maintain interest rates). History shows that during periods of economic data vacuum, the volatility of the crypto market tends to spike.
● Medium to Long-term (1-3 months): Policies and fundamentals dominate
Legislative and Regulatory Breakthroughs: The Senate continues to advance the "Responsible Financial Innovation Act," which, if passed by the end of the year, will pave the way for token securitization and ETF expansion, attracting incremental capital.
Supply and Demand Structure Support: Supply side: The Bitcoin halving cycle combined with ETF inflows (up to $2.7 billion in a single day) may exacerbate supply-demand imbalances. Demand side: The U.S. deficit has ballooned (reaching $1.97 trillion), shaking the dollar's credibility, with institutions like Standard Chartered believing Bitcoin is becoming a "new safe-haven tool," complementing traditional gold.
Risks and Balance Points: The "rare earth-soybean" card in the U.S.-China game creates constraints: China's rare earth controls (accounting for 92% of global refined capacity) may impact the U.S. AI hardware chain, while the U.S. soybean inventory backlog (with prices down 23%) forces Trump to compromise. The crypto market needs to be wary of "black swans," such as a liquidity crisis triggered by the tariff war, leading to a chain reaction of forced liquidations of collateral (cryptocurrencies).
However, institutional consensus believes that trade frictions will not change the long-term trend of the crypto market. After the leverage cleansing, the market structure will be healthier, similar to the bull market that began after the "cleansing" in March 2020.
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