This episode unpacks the market turmoil following Trump's "Liberation Day" tariff announcements, analyzing the immediate crypto impact and potential strategic plays for investors amid global economic uncertainty.
Introduction: Liberation Day and Tariff Shockwaves
Avi and Jonah kick off by discussing the market's reaction to the newly announced Trump tariffs, dubbed "Liberation Day." Avi expresses a sense of unease, feeling "liberated from my hopes, my dreams, my money," reflecting the broad market anxiety. They note the historical significance, comparing the potential shift in global economic order to post-WWII changes, something largely unforeseen even a couple of years ago. Avi suggests Trump might be using the tariffs, set to take effect soon (April 6th and 9th mentioned), as a negotiation tactic, hoping for a quick resolution where all parties remove tariffs, but acknowledges the current situation is "very hairy." He observes conservative voices questioning Trump's strategy, stating, "he clearly has a plan in in his head."
Market Momentum and Bitcoin's Relative Strength
- Avi reiterates his framework: market momentum is currently down, and value levels haven't clearly been reached, especially with equity markets declining.
- Altcoins are bleeding, and while he sees Bitcoin (BTC) below $80k as a potential mid-term buy, he lacks strong conviction otherwise.
- Jonah counters, suggesting this sharp downturn "may be the flush that marks the bottom" and advocates for buying Bitcoin now, despite previous calls on the way down.
- Jonah emphasizes Bitcoin's relative strength compared to equities and other assets during this sell-off, noting, "I think bitcoin is showing relative strength right now and I think that you're supposed to take heat of that."
- He hasn't recommended other altcoins, focusing solely on Bitcoin's resilience.
Analyzing Trump's Tariff Strategy
- Jonah offers a more nuanced perspective on Trump's tariff strategy, suggesting it might be a calculated long game rather than solely driven by immediate market reactions.
- He empathizes with the idea of enduring short-term pain for potential long-term gains, like achieving a fairer global trade balance and giving the Federal Reserve more room to cut rates.
- Avi agrees Trump likely wants some pain but critiques the approach of "taking on the entire world at the same time," suggesting a region-by-region negotiation might have been smoother.
- However, Avi believes Trump, being the "stock market president," cannot tolerate excessive market decline due to his ego and the potential loss of his governing mandate if markets tank severely early in his term.
Altcoin Weakness and the RWA Niche
- The conversation shifts specifically to altcoins, with Avi stating they are performing poorly across the board, except for potentially RWA (Real World Assets) tokens.
- RWAs represent assets existing outside the blockchain that are tokenized to be accessible on-chain, potentially offering yields tied to traditional finance.
- Avi mentions he's watching specific RWA projects like Pendle, Plume, and Curve, waiting for good entry points to add exposure against Ethereum (ETH).
- He believes these could gain traction over the next year due to anticipated regulatory clarity.
- Outside of this niche, Avi confirms he's largely in cash, waiting for better deployment opportunities, concluding, "inverse alt season looks honestly it looks pretty damn good."
Market Volatility and the WSJ Tariff Rumor
- The speakers highlight the extreme market volatility, exemplified by a Wall Street Journal (WSJ) incident.
- Jonah describes how the WSJ published an article incorrectly stating tariffs would be lower (10%), causing a sharp market rally ("gigapump"), only for the market to crash again when the information was revealed as false.
- This underscores the market's sensitivity to news and rumors surrounding the tariff situation, disrupting typical "sell the rumor, buy the news" expectations.
Tariff Details and Economic Consequences
- Jonah provides specific details on the cumulative tariff impact on Chinese goods, citing figures suggesting increases making the total tariff burden potentially over 100% compared to pre-Trump levels (original duties + Section 301 + earlier 20% + new 34% + potential oil-related tariffs).
- Both speakers agree that these tariffs act as a broad consumption tax, impacting domestic consumers, not just foreign goods.
- Jonah predicts a drop in consumption: "I think that economics 101 will kick in and higher prices will result in lower demand."
- Avi concurs, suggesting a potential deflationary effect as asset holders (who represent a large portion of consumption) feel poorer due to market declines and reduce spending.
Political Calculus and Potential Stimulus Measures
- The discussion touches on the political implications, drawing parallels to how inflation arguably hurt Joe Biden.
- Jonah suggests the Republicans, traditionally the "tax cut party," will likely need to introduce stimulus to counteract the tariff's negative economic effects.
- He anticipates potential tax cuts, possibly targeting lower/middle incomes (like eliminating taxes under $150k or on tips), which could be "pretty bullish for things that retail likes to yolo like crypto."
- This sets up a dynamic where negative tariff impacts might be followed by potentially market-positive stimulus measures.
Market Narrative Dynamics: Pricing In Bad News?
- Avi analyzes the market narrative, noting that prior bad news seemed absorbed before the "Liberation Day" tariffs provided fresh negative catalysts.
- Now, with the tariff news out, the question becomes what happens next.
- He outlines potential paths to improvement: tariffs being walked back, successful negotiations, or simply the market stabilizing.
- Both speakers lean towards consumption being hit, increasing recession risk unless offset by significant tax cuts.
- The key takeaway is that the market needs new information (good or bad) to move significantly further; simply rehashing the current tariff situation might not be enough to drive prices much lower.
The Recession Debate: Intentional vs. Systemic Risk
- Jonah argues forcefully that any potential recession resulting from these tariffs would be fundamentally different from past crises like the 2008 Global Financial Crisis (GFC) or COVID-19.
- He characterizes this situation as "intentional," "self-inflicted," and "man-made" by policymakers.
- His core point is that because it's an artificial construct, it can be unwound relatively easily if the economic pain becomes too severe, unlike systemic crises.
- "Because this is man-made... it can be unwound just as easily," Jonah states, suggesting policymakers retain control and are unlikely to let the situation spiral completely out of control, especially given the political timing (addressing pain early in the term).
Bitcoin Technicals, Trading Strategy, and ETH Concerns
- Avi expresses caution about Bitcoin's apparent strength relative to falling equity markets (like Nasdaq), suggesting it's often a delayed reaction or due to temporary idiosyncratic buyers, and shouldn't be over-weighted.
- He specifies his preferred BTC buy zone is lower, around $78k, not the current $83k.
- He views the current environment as a "phenomenal market if you want to trade," advocating for buying extremes (like 8-10% down days or large liquidations) and taking profits very quickly.
- Avi explicitly suggests shorting Ethereum (ETH), potentially targeting $1500, seeing it as particularly vulnerable even if BTC holds its lows.
- He also recommends considering puts for portfolio protection given the high uncertainty.
Historical Context and the Post-2008 Market Backstop
- Jonah places the current volatility in the context of the post-2008 market environment.
- He argues his long-term bullish bias stems from the fundamental shift in 2008 when "governments around the world... decided to underwrite risk in the economy."
- He believes this implicit government backstop prevents catastrophic, uncontrolled collapses like the GFC, suggesting that while painful, the current sell-off isn't "crazy" by historical standards and that policymakers will likely intervene if systemic risk emerges.
- This reinforces his view that the current tariff-induced downturn is likely manageable and potentially short-lived.
Gold's Performance and Personal Holdings
- Amidst the crypto and equity turmoil, the speakers briefly note the strong performance of Gold, mentioned as reaching $3200 (though this figure seems high relative to current spot prices, it reflects the sentiment discussed) and its market cap growing significantly ($22 Trillion mentioned).
- Jonah shares an anecdote about owning a substantial amount of physical gold, primarily jewelry acquired from India, viewing it as a tangible asset for uncertain times.
- This highlights gold's traditional role as a safe haven, contrasting with crypto's volatility.
Final Trading Recommendations and Altcoin Shorts (WIF Example)
- The episode concludes with a summary of actionable trading ideas.
- Avi reiterates: look to buy Bitcoin aggressively on dips, specifically targeting the $73k-$78k range.
- Shorting Ethereum towards $1500 or lower is presented as a high-conviction trade.
- Most other altcoins are considered prime short candidates ("throw darts at your watch list,") with the notable exception of the previously discussed RWA category.
- Jonah highlights WIF (Dogwifhat) as his "favorite bellwether for shorts," noting its significant drop and calling its decline "the smoothest death spiral I've ever seen," reinforcing the bearish outlook on speculative altcoins.
This episode stresses navigating extreme volatility driven by Trump's tariffs through tactical trading—buying deep BTC dips ($73-78k), shorting ETH and weak altcoins (like WIF), while watching RWAs. Investors should monitor for potential policy reversals or stimulus (tax cuts) that could rapidly shift the current negative market sentiment.
