Bitcoin rebounded above $82,000. Is it a market Rebound or a reversal?

The global financial markets are all manipulated by one person.

As the global trade war triggered by Trump escalates, the market's expectation of a recession in the U.S. is also rising. On March 10, local time, the U.S. stock market experienced a black Monday, with the three major indexes collectively plummeting. The Dow Jones Industrial Average fell by 2.08%, dropping nearly 900 points; the Nasdaq Composite fell by 4%, and the S&P 500 fell by 2.7%.

When the lips are gone, the teeth will be cold. The cryptocurrency market is also difficult to escape. Bitcoin fell below 77,000, touching 76,560 US dollars, with a single-day decline of over 8%. ETH also performed poorly, falling below 1800 US dollars in the short term, reaching a low near 1760 US dollars. Purely in terms of price, it has returned to the level of four years ago.

However, as time has come to now, the market seems to have started to warm up, with Bitcoin recovering to $82,000, repairing the decline, and ETH also rising above $1900.

The external environment is unpredictable, and the market is full of doubts about whether this wave of growth is a short-term rebound or a reversal signal.

Whether it's a success or a failure, Trump not only has an impact on the cryptocurrency market but also carries the same weight in the global financial market. To discuss the current decline in the cryptocurrency market, we must start with Trump.

I vaguely remember that in the months leading up to the election day, the global financial markets were actively responding to the trading theme of 'Trump.' Investors were crazily betting on Trump's relaxation of regulations, tax cuts, immigration policies, etc. The U.S. stocks, the U.S. dollar, and Bitcoin all surged, with the ten-year U.S. Treasury yield soaring by 60 basis points at one point. Small-cap stocks showed significant reactions. On the second day after the election, the Russell 2000 Index, representing U.S. small-cap stocks, surged by 5.8%, marking the largest single-day gain in nearly three years. From election day to before Trump took office, the U.S. Dollar Index roughly rose by 6%, and in the first month of Trump's presidency, the S&P 500 Index rose by 2.5%, with the tech-heavy Nasdaq Index climbing 2.2%.

It can be seen that the market has a strong positive expectation for Trump's inauguration, but the fact proves that Trump has brought not only a sharp rise to the financial market, but also a signal of economic recession.

From the perspective of the United States, the situation of indicators is extremely complex. In February, the non-farm employment population increased by 151,000, slightly below market expectations; the unemployment rate was 4.1%, compared to the previous value of 4%. Unemployment is still under control and can even be discussed in a positive light, but looking at inflation, it remains stubbornly high, with the**** U.S. February one-year inflation rate expectations reaching a final value of 4.3%, the highest since November 2023. From the consumer market perspective, the New York Fed's survey of consumer expectations in February showed that consumers' inflation expectations for one year later increased by 0.1 percentage points, reaching 3.1%; the proportion of households expected to worsen their financial situation in the next year rose to 27.4%, the highest level since November 2023.

Against this background, several institutions have already begun to predict a US recession. The latest forecast released by the Federal Reserve Bank of Atlanta on the 6th shows that the US GDP is expected to contract by 2.4% in the first quarter of this year. According to J.P. Morgan's forecasting model, as of the 4th, the probability of a US economic recession has increased from 17% at the end of November last year to 31%.

The reasons for this series of data are closely related to Trump's policy propositions. After all, the president's recent method of making money is simple and too rough - tariffs. As early as February 1st, Trump signed an executive order stating a 10% tariff on American goods, and a 25% tariff on Mexico and Canada, indicating the beginning of a tariff war. But as Mexico and Canada both softened, Trump waved his hand to postpone for a month. Just when the world thought there was still room for negotiation on tariffs, on February 27th local time, Trump announced on social media that the decision to impose a 25% tariff on Canadian and Mexican products will take effect as scheduled on March 4th, with an additional 10% tariff on China.

This time, in addition to China's discomfort, Canada and Mexico have also been thoroughly provoked. On February 27, the Canadian Prime Minister strongly responded by imposing retaliatory tariffs on the United States, and Mexican President Xibo also stated that Mexico would take countermeasures if necessary. On March 6, seeing Trump's out-of-control behavior, he once again signed an executive order to adjust the imposition of tariffs on the two countries, exempting imported goods that meet the conditions of the US-Mexico-Canada Agreement from tariffs. And just yesterday, the absurd White House made another announcement, first Trump announced a 25% additional tariff on Canadian steel and aluminum, then expressed that there would be no additional tariffs, truly demonstrating what it means to put negotiations on the table.

In fact, Trump's inauguration is not a good time, at least for the president. What Biden left behind is indeed a big mess. In addition to the historical burden accumulated over the years, $36 trillion in national debt, a federal budget deficit of 1.8 trillion, there are also 42,000 federal employees working from home, a large number of illegal immigrants, unsustainable judicial reforms, and ongoing external expansion of sanctions against Russia.

**Faced with a mess, Trump had to make radical reforms, cutting costs and increasing revenue. Firstly, Musk, his confidant, was made to reduce internal government spending significantly. Secondly, tariffs were raised to generate revenue and reform. Thirdly, the 'poor relatives' were not allowed to leech off them, which also pointed to the ceasefire between Russia and Ukraine and the increase in EU military spending.

In the long run, a series of combinations can have predictable effects, streamlining government agencies can reduce government spending, border governance can widen the national security boundaries, imposing tariffs can reduce trade deficits flowing back to the United States. However, reform often means bloodshed, the existence of a painful period is difficult to avoid, and the pain is just beginning, the market, just can't bear it.

On March 10th, when asked whether he expected an economic recession in the United States this year, Trump said he "did not want to predict such a thing." Trump said the U.S. government is "bringing wealth back to the United States," but "it takes some time." In just a few words, it quickly brought down the financial markets. The three major U.S. stock indexes all fell, with the Dow Jones Industrial Average falling 890.01 points, or 2.08%, from the previous trading day; the S&P 500 stock index fell 155.64 points, or 2.70%; and the Nasdaq Composite Index fell 727.90 points, or 4.00%. Fanng all plummeted by 4%, and Tesla's stock price fell by more than 15%.

The cryptocurrency market has also experienced a sharp decline, with Bitcoin falling by 8% to touch 76,000, ETH dropping below the jokingly maintained 4-year mark of $2200 to return to 1800. The altcoin market has plummeted, with the total market value of the cryptocurrency market falling below 26.6 trillion US dollars. Wall Street institutions have entered emergency refuge mode, with a total net outflow of $369 million from Bitcoin spot ETFs on March 10, marking the sixth consecutive day of net outflows; Ethereum spot ETFs saw a total net outflow of $37.527 million, continuing the trend for 4 days.

But the good news is that currently all currencies are gradually warming up, and the total market value of cryptocurrencies has slightly rebounded to $2.77 trillion, with a 2.5% increase in 24 hours, and Bitcoin has also returned to above $83,000. This raises the question: is this warming a short-term rebound or the eve of a reversal?

It can be seen that the price trend of Bitcoin and even the encrypted market are closely related to US economic indicators, and the current market is actually quite similar to the United States, at the intersection of bulls and bears. On the one hand, the United States has a strong private sector balance sheet, with the leverage ratio of the household sector at a historically low level and the unemployment rate still relatively good; but on the other hand, the CPI remains high, and the cost of food, housing, and other goods has become the most important economic issue in the United States. In recent times, the skyrocketing egg prices threaten the entire United States; the momentum of US economic growth also appears to be insufficient, AI is repricing, and the frenzy of the seven sisters of US stocks continues to ebb.

The cryptocurrency market is the same. On the one hand, it is difficult for people to believe that this is a bear market with the price of Bitcoin exceeding $80,000 and the strategic reserves of Bitcoin, plus the expected relaxation of regulations. On the other hand, the decline in market growth momentum and liquidity is real, and the altcoin market is wailing.

So it's about looking at the price, or going back to the U.S. and Trump. There is a voice in the market that believes Trump is artificially creating a recession by forcing the Fed to cut rates to reduce the cost of borrowing. This view also has elements of conspiracy theory. After all, as president, his aversion to economic recession is definitely greater than his liking. But it must be admitted that the current warning signs of economic recession have raised expectations of a rate cut, and the market mostly believes that a rate cut will come in June. If a successful rate cut leads to quantitative easing and combines with a relatively strong balance sheet fundamentals, the U.S. may see a reshaping of the business cycle after the collapse of the stock market, of course, without ruling out the possibility of a recession.

In the short term, tariffs and economic uncertainty will continue to strengthen. Before the macro market improves, the cryptocurrency market is unlikely to see a true reversal. From the current situation, despite frequent positive news, voices including Trump's are hardly able to influence the cryptocurrency market, and the market's self-generating ability is weak, requiring external liquidity injection rather than any verbal policy positives.

In a non-recession scenario, the maximum potential drop for Bitcoin could be a return to the entry price of most institutions before Trump took office, around $70,000, but in a recession scenario, a significant price decline is possible. Taking the S&P 500 as a reference, during a recession, the S&P 500 may drop between 20% and 50%, and Bitcoin may also experience an extreme decline. Of course, for now, there is no need to panic. The densely populated area of BTC market chips remains intact, still between $90,000 and $95,000, indicating that regional investors have not been actively trading.

Based on the current situation, it is predicted that due to the lack of market sentiment sparked by the White House cryptocurrency summit and Bitcoin strategic reserve, the likelihood of significant positive events in the next three months will significantly decrease. Unless the macro environment gradually improves, the market will lack growth momentum. Considering the safe-haven properties of Bitcoin, Bitcoin may transition from small-scale fluctuations to large-scale oscillating growth trends on an annual basis. However, the altcoin market is unlikely to perform well, except for the top coins and the temporary narrative of U.S. manufacturing, other coins are unlikely to see growth.

Of course, in the long run, most industry professionals still have a positive outlook on the market. For example, Arthur Hayes, despite his comments suggesting Bitcoin may fall to $70,000, has always insisted that Bitcoin will eventually reach a million dollars. Messari researcher mikeykremer also wrote that Bitcoin may eventually reach $1 million, but before that, it needs to face a severe bear market. Buy data is also quite optimistic, with CryptoQuant analyst Cauê Oliveira revealing that whales have accumulated over 65,000 BTC in the past 30 days. LMAX Digital's Joel Kruger is even more optimistic, stating that Bitcoin is approaching a bottom and is expected to rebound in the second quarter.

However, no matter what, in a market dominated by external economic conditions, tariffs, inflation, and geopolitics will all impact the crypto market. For investors, besides waiting, perhaps it is still waiting.