This episode unpacks the immediate fallout from Trump's controversial tariff announcement, exploring the chaotic calculations, geopolitical ripple effects, and strategic implications for Crypto AI investors navigating heightened market uncertainty.
Trump's Tariff Announcement and Initial Market Reaction
- The discussion kicks off analyzing the newly announced Trump tariffs, which Cedric describes as potentially worse than expected because they were made up.
- The speakers note the immediate negative market reaction, with Nvidia down significantly in pre-market, gold retreating, and Treasury yields climbing, indicating broad risk-off sentiment.
- The core issue highlighted is the lack of certainty following the announcement, contrary to expectations. Yan points out, “That's what everybody was saying is like at least we'll get certainty on April 2nd and now we'll know and there's absolutely zero certainty.”
- This uncertainty stems from the seemingly arbitrary and extreme nature of the proposed tariffs.
Analyzing the Tariff Justification and Strategy
- The speakers delve into the unconventional methodology behind the tariff calculations, which Yan explains seems reverse-engineered from trade deficits using a simplified formula.
- Cedric notes the administration's 400-page report attempts to justify these high rates by including qualitative factors like trademark disputes (e.g., Parmesan cheese) and concerns over foreign subsidies (e.g., China's support for high-tech industries), moving beyond simple import/export numbers.
- The prevailing theory discussed is that the extreme opening stance is a negotiation tactic; Cedric suggests, “if you come out like a crazy man then the chances of people folding is much higher,” aiming to force other countries to lower their own barriers quickly.
Geopolitical Shifts and US Industrial Policy
- The conversation broadens to the strategic goals behind the tariffs, including the push for reshoring the US industrial base, a point Trump emphasized by highlighting China's shipbuilding capacity.
- However, Jose raises a potential contradiction: aggressive tariffs might alienate allies and push them closer to China, undermining broader geopolitical goals.
- Cedric counters that this radical shift might be necessary, arguing the US needs to restructure its global position due to changing warfare dynamics (citing drone effectiveness and cost mismatches seen in Ukraine, referencing Eric Prince's analysis) and the fragility of critical supply chains (like Apple's reliance on China and Nvidia's on Taiwan).
- He posits that the current path of high debt and low domestic manufacturing is unsustainable, especially if geopolitical tensions escalate.
Market Uncertainty and Potential Scenarios
- Despite the dramatic policy announcement, the speakers observe that stock markets haven't collapsed entirely, suggesting some market participants might still expect a quick resolution or negotiation.
- Yan highlights the “ridiculousness of the calculation” might be fueling hopes for a pivot.
- However, the risk of prolonged tariff implementation remains, potentially leading to severe business disruptions, inflation, and retaliatory measures.
- Adding to the uncertainty is the “Doge stuff” – referring to Department of Justice (DOJ) initiatives potentially cutting spending or uncovering fraud (like in USAID programs), which could also impact economic flows, though the scale is debated.
Speaker Positioning and Investment Strategies
- Cedric remains largely unchanged in his crypto portfolio, stating, “nothing of my thoughts within crypto... has changed at all.”
- Yan maintains a net long position but has taken a short ETH position as a hedge “to help myself sleep at night.”
- Duncan is holding a significant cash position while remaining long crypto exposure. He also recently invested in Abtronics, a US-based humanoid robot company.
- Abtronics Rationale: Duncan sees humanoid robots, particularly those integrated with AI (Abtronics partners with Google on the AI brain), as a key way to monetize AI advancements and address potential labor needs if the US pursues protectionist policies and reshoring. He views companies like Abtronics, Tesla, Figure, and Agility Robotics as major North American players in a space potentially shielded from Chinese competition.
Crypto Market Outlook and Specific Asset Discussion
- The general sentiment is cautious, with Duncan noting, “I feel like this stuff like everyone kind of wants it to be like a like let's puke and then V bounds um but I like the tariff thing might be drawn out.”
- The potential impact of US Tax Day (April 15th) is mentioned as a source of possible forced selling, although extensions are possible.
- Cedric suggests watching specific, long-term favored altcoins for unusual sell-offs caused by factors like fund redemptions or tax selling, potentially offering entry points.
- The discussion touches on Hyperliquid (HYPE), noting its significant run-up and subsequent drawdown, and the potential tax implications for early airdrop recipients who realized large gains quickly.
Timing Token Launches: Strategic Considerations
- Peak Bull Market Launch: Jose argues this is best for the team and project treasury, maximizing initial valuation and funding potential, though potentially worse for public buyers. Cedric adds the psychological anchoring of a high launch price can be powerful.
- Down Market / Pre-Bull Launch: Yan and Duncan suggest launching lower can foster stronger community accumulation over time, citing Solana (launched post-Black Thursday 2020) and potentially Tia as examples. Yan notes, “basically every project that succeeded and lasted over time traded relatively low for a period.”
- Hybrid Approach: The Hyperliquid launch is analyzed as a potential middle ground – a strong product combined with large airdrops fostered community, though its price action was also heavily supported by team buying using accumulated protocol fees.
- Core Consideration: The ultimate success depends heavily on the project's long-term viability. As Cedric puts it, “if you think you're gonna make the next Solana... then yeah it doesn't really matter when you launch.” The trade-off lies between maximizing the initial war chest versus building a resilient, invested community from the start.
Bitcoin's Resilience Amidst Macro Uncertainty
- Despite the market turmoil, Bitcoin's relative strength is noted, holding up better than some traditional assets like QQQ since early March lows.
- Significant institutional buying is cited, including MicroStrategy (Saylor), potential GameStop deployment, ETF inflows, and miner fundraising (Mara).
- Cedric speculates that a global shift towards a more “realist,” multi-polar world focused on tangible manufacturing and military strength could be long-term bearish for speculative “magic coins” (altcoins) but potentially bullish for Bitcoin as a hard asset, even if increased military spending necessitates more money printing globally.
The Circle IPO: A Closer Look
- The upcoming Circle IPO is discussed with skepticism. Yan points out their reported net income (around $150 million, potentially $300 million adjusted) seems low relative to their $60 billion USDC market cap and potential $5 billion IPO valuation, implying a very high earnings multiple for what resembles a banking business.
- Concerns are raised about their cost structure (high employee count) and the fact that partners like Coinbase appear to capture significant value from USDC yield programs.
- Furthermore, their margins are expected to compress as interest rates eventually decline, contrasting sharply with Tether's leaner, highly profitable model.
Reflective and Strategic Conclusion
This episode underscores the profound market uncertainty triggered by aggressive US tariff policies and broader geopolitical realignments. Crypto AI investors and researchers must closely monitor policy negotiations, global power dynamics, and evolving market structures (like the Circle IPO) to navigate risks and identify strategic opportunities in this volatile landscape.
