Sophia’s Thoughts On A Presidential Market Swing
The crypto market faced a brutal sell-off this week. Is this just a temporary shakeout, or are we witnessing a deeper shift in the market?
These are Sophia's Thoughts:
Trump’s announcement of a Crypto Strategic Reserve initially triggered a market surge, but uncertainty remains over its actual implementation, with experts divided on its composition and legitimacy.
Despite the excitement, the market quickly reversed as looming tariff implementations triggered a broader risk-off sentiment, with Bitcoin and altcoins shedding their gains.
Whales and institutional traders emerged as the biggest winners, while retail investors were largely caught off guard.
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🚀 Last week’s market performance
The crypto market had an incredibly volatile week, shooting up after President Trump's strategic reserve post, only to revert the following day. The market ended the week down 5.7%. Bitcoin (BTC) followed the market and ended the week down 5.9%. The best performing coin of the week was Cardano (ADA), which gained 25.2%, as it was one of the coins named to be included in the strategic reserve. The worst performing coin this week was Raydium (RAY) which fell 26.5%.
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📢 The President’s Tweet and the Strategic Reserve
On March 2, 2025, President Donald Trump took to Truth Social to announce the creation of a U.S. Crypto Strategic Reserve. The president followed up a few hours later naming Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Solana (SOL), and Cardano (ADA) as key holdings. His declaration that the U.S. must become the “crypto capital of the world” sent shockwaves through the market. The crypto market cap added over USD 300 billion while cryptos across the board experienced double-digit gains. However, these gains were quickly erased. The details of this reserve remain unclear, raising questions about how and when it will be implemented.
Market expectations have been rising following the announcement. According to Polymarket, the probability of the U.S. establishing a national Bitcoin reserve in 2025 surged from 41% up to 62%. Despite optimism, experts caution that significant hurdles remain, including potential congressional approval and uncertainty over which assets would be included in the reserve.
Unlike Trump’s broad-based crypto reserve proposal, Coinbase CEO Brian Armstrong has pushed for a Bitcoin-only reserve, calling Bitcoin “the simplest and clearest successor to gold.” James Butterfill, head of research at CoinShares, reinforced this perspective, stating that assets like Solana and Cardano “are more akin to tech investments,” rather than monetary reserves. He noted that the announcement reflects a patriotic stance toward broader crypto technology rather than a focus on fundamental properties. Arthur Hayes, co-founder of BitMEX, also expressed skepticism, dismissing the announcement as “just words” and emphasizing that without congressional approval to borrow money or a revaluation of gold, the government lacks the means to implement the plan. For now, the big question remains: Is this reserve actually happening, or was this just another bold statement from the Trump administration?
💥 The Correction
Despite the initial surge following Trump’s crypto reserve announcement, the market swiftly reversed course on March 3-4, 2025, erasing the previous day’s gains. This sharp downturn coincided with the implementation of long-anticipated tariffs. Trump originally announced 25% tariffs on imports from Canada and Mexico, and 10% on China, on February 1, 2025, with an effective date of February 4. After delays, he confirmed on February 27 that the tariffs would officially take effect on March 4, with an additional 10% hike on Chinese goods, bringing the total tariff to 20%. The market had been bracing for impact, but the immediacy of the March 4 implementation jolted investors into action.
The S&P 500 fell 1.76%, the Dow Jones dropped nearly 1.5%, and the Nasdaq slid 2.6% on March 3, reflecting broad-based risk aversion. Crypto followed suit, with Bitcoin and Ethereum plunging over 10% by March 4 as the tariffs went into effect. Kathleen Brooks, research director at XTB, pointed to growing fears of reciprocal tariffs from affected countries, heightening concerns over a potential trade war and broader economic fallout.
At the same time, suspicious trading activity has caught analysts’ attention. Blockchain analysts have identified a crypto whale who made USD 6.8 million from leveraged bets on BTC and ETH just before Trump’s announcement. While no direct evidence of insider trading has emerged, the timing has raised speculation about how certain traders may have positioned themselves ahead of the news. Additionally, ownership analysis of Solana, Ripple, and Cardano—the three altcoins Trump specifically mentioned—reveals that large investors (whales) hold significant portions of supply.
🔮 The Impact: Who Won, Who Lost, and What’s Next?
Between March 2 and 3, market volatility favored those who moved quickly. Shortly after President Trump’s post, Eric Trump claimed retail investors “won” due to the Sunday timing of the announcement, which allowed them to act before Wall Street. In a tweet, he celebrated the advantage of releasing the news when traditional markets were closed, suggesting it gave everyday traders a head start. However, this claim has not been substantiated and given the high concentration of ownership among whales, it’s unclear if retail traders truly benefited.
Expert opinions remain divided on the long-term impact of Trump’s crypto reserve. Federico Brokate sees it as a potential catalyst for institutional adoption, while skeptics like Arthur Hayes argue that without clear funding mechanisms, it’s more rhetoric than reality. In the short term, tariff concerns have erased much of the reserve-driven gains, keeping the market highly volatile. Looking for clarity, the market is anticipating labor data at the end of the week as well as the first Crypto Summit at the White House on March 7.
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