Author: David C Source: Bankless Translation: Shan Oppa, Golden Finance

Trump's long-awaited "Liberation Day" tariff announcement, which may contain a comprehensive plan to impose a 20% tariff on all imported goods—a proposal that was proposed during the campaign and now seems to be an option for serious discussion again.

For a period of time, it has experienced a tortuous and chaotic process, with many delays and changing schedules, and variables appearing again at the last moment. The official caliber has also changed since this week, from Sunday's "all-global, without exception" to Monday's "relatively loose" or even "very friendly".

This capricious statement makes the market nervous, and the crypto market, as a market for trading around the clock on 24/7, often becomes the first reaction zone for emotional fluctuations.

As market sentiment changes rapidly, and Trump may change the tone on Truth Social at any time, the real situation of the crypto market before the announcement has become a key issue.

1. Bitcoin performed best

Amid market fluctuations, Bitcoin performed relatively strongly. In the past month, $BTC has outperformed the S&P 500, the Nasdaq index and the Big Seven tech stocks despite the overall market decline, which is quite abnormal, as Bitcoin has historically been similar to tech stocks.

Bitcoin's resilience is two major factors:

Market structure: Crypto market 24/7 transactions, which can respond to messages faster. Therefore, $BTC may have reflected market concerns about tariffs in January and February, while traditional markets lag behind.

Market sentiment: Even though all eyes are focused on the upcoming tariff news, Bitcoin remains stable. $BTC is currently in the middle of the support and resistance range, neither reaching the extreme point nor having enough room to fluctuate according to the message surface. Trading activity slowed down, panic selling decreased, and long-term holders began to quietly increase their holdings.

Demand still exists: MicroStrategy's Michael Saylor continues to increase its holdingsBitcoin, which even raised its financing target from $500 million to $722.5 million, indicates strong demand in the market. Bitcoin ETF capital outflow trend slowed down and briefly turned positive, indicating that market sentiment began to improve. Overall, Bitcoin remains firm in the face of weakening other markets, with stable demand, low-volatility trading environment and long-term buying suggesting that its fundamentals are more stable than market sentiment shows.

2. The Federal Reserve tightens, slows down, and liquidity rebounds

In the past few years, the Federal Reserve has curbed economic overheating by raising interest rates and reducing its balance sheet. One way is to prevent maturing bonds from being repurchased, which is equivalent to withdrawing cash from the market. Such operations usually have the greatest impact on risky assets such as crypto assets.

The Federal Reserve begins to relax its currency. The Fed will slow down its balance sheet. This is different from starting “quantitative easing” or “printing money again,” but it does mean that the Fed will not consume system funds as much as it used to be.

Advanced market environment: Historical data show that after the Fed suspends tightening, risky assets usually experience a breathing period, and market responses often lag behind by 10-12 weeks, so Q2 may present a more favorable environment.

Liquidity indicators show that the flow of US dollar funds has begun to recover, and capital is gradually returning to the market. Although the market trend will not be reversed immediately, this is an early signal of a market rebound.

Conclusion: The contraction has not yet ended completely, but at least for the crypto market, the resistance to the macro environment has begun to weaken.

3. Bitfinex giant whale bets long

This week, a signal worthy of attention appeared again: the giant whale on the Bitfinex exchange is building long positions. Bitfinex is closely related to Tether and although it is not the most traded exchange, it often leads in price trends.

Analyst Cole Garner pointed out that the huge long positions on Bitfinex often indicate an uptrend in the market. This pattern has appeared repeatedly: long positions on Bitfinex have increased significantly, and within the next 20-40 minutes, the price of Bitcoin began to rise, and then the altcoin market followed up.

Key factors:

•"Alpha cartel" effect: Bitfinex traders' leveraged longs often trigger a chain reaction in the entire market.

•Signals outweigh noise: Although Bitfinex is not the most active exchange, its leveraged trading data often provides clues to the next trend of the market.

At present, these signals are flashing bullish warnings. In a market full of uncertainty, this is perhaps the most noteworthy trend.

4. Market sentiment collapses in a total manner

Although there are some positive signals, it must be noted that companies, consumers and investors seem to be in a state of panic.

According to the latest survey by the Philadelphia Fed, business confidence has dropped sharply, with a decline close to the level before the economic downturn in 2022. This indicator, while not perfect, was a similar plunge that occurred before the bursting of the Internet bubble in 2000 and before the 2008 global financial crisis.

At the same time, investor sentiment fell to the bottom. A survey by the American Association of Individual Investors (AAII) shows that more than 60% of retail investors are pessimistic, while the latest survey by Bank of America (BofA) shows that fund managers' allocation ratio to U.S. stocks have dropped the largest in history. Consumers are equally uneasy, with 44.5% of respondents expecting stock markets to fall (Source: Blocmates).

•Panishment: Although this comprehensive pessimism does not necessarily lead to market collapse, it indicates that the market's risk appetite is rapidly drying up.

•Reverse opportunity of the crypto market: In the case of such a defensive layout and liquidity improvement in the overall market, if even a small positive surprise occurs, the crypto market may become the biggest beneficiary, and the current market is showing this possibility.

In short, the entire financial system is in a state of tension, and this fear will either lead to a deeper market decline or become a catalyst for the next wave of rising markets.

Entering "Liberation Day", where will the market go?

The Fed is retreating, liquidity is quietly improving, Bitcoin remains stable in the middle, and some of the smartest traders in the field are going long. Meanwhile, business confidence is shaking and investor sentiment has fallen to the bottom. Ironically, these more pessimistic signals can actually pave the way for a sharp reversal – assuming we are not caught off guard.

And that's why tomorrow comes. A comprehensive tariff of 20% may tighten the financial environment and bring shock to risky markets, especially cryptocurrencies. But more cautious push or delay again – may immediately change market sentiment, especially when people are already ready for the worst.

In Trump's style, everything may change in one announcement. But if he chooses a milder path, the crypto market could be the biggest beneficiary of a new round of optimism.

Anyway, the next 24 hours may determine the market tone for the next few weeks.