Why Crypto Crashed HARD This Weekend

Pure. Absolute. Chaos.

That is the only way I would describe the past few days in the crypto market. Once again, retail investors have been shown that nothing is guaranteed, and truly only the strongest, most convinced, and most daring will forge through the path laid before us.

But why did this happen? What caused the market to panic, the emotions to run hot, and should you be a buyer, a seller, or some guy in the middle wondering what in the world is even happening….

The answer seems to be a little simpler than one would think.

On Saturday, President Donald Trump announced that the United States would officially be passing tariffs against Mexico, Canada, and China, and let me tell you, the markets did not like that!

I was fine pretending that I was on a beach in Florida sipping something cold with hot rays and good ocean, but pretty much everyone else was forecasting the worst possible outcomes. This pushed Bitcoin down over 10% in 3 days, with altcoins (like Cardano) taking much bigger punches (Cardano fell 47% at its peak).

The major market participants took the president’s decisions as a major no no for good economic policy and probably envisioned a future where tariffs could cause long term increases to American citizens. Imagine a world where already over priced groceries, cars, clothes, electronics, and even precious avocados are 10% to 25% more expensive than they are today. Amongst that, there was also speculation that trade wars could start due to the new tariffs and that the rise in cost of goods could reignite inflation.

Isn’t your life already hard (and expensive) enough!?!?!?

Well you could imagine how this would make the hedge fund, mutual fund, and average retail investor feel. Their heads were probably spinning with weekend worry (a disease that ruins the investor) and visions of the world ending. Leave people alone with some free time on the weekend, and the market closed, and they will find a way to conjure up how bad this can be for investments. This reminds me of all the other times that people said the market was doomed especially as people tried to front run what they think will be a major market sell off.

All of this panic because of a new tariff. And once we have panic, well there is no stopping the cascading effects. Liquidations upon liquidations rapidly forced the market lower and lower and lower until assets like Bitcoin wicked down to $91,530 and Cardano wicked down to $0.507. Just imagine your uncle Johnny who just started buying in again as Bitcoin wicked to a new ATH at $108,000.

Those are some impressive numbers, and in total, $2.3 billion was wiped from the crypto market over the weekend unwinding leverage traders, futures traders, and then retail investors who were too easily shaken out. This event can only be paralleled to the FTX unwinding as far as total size of losses. Sorry uncle Johnny, but you were just destined to lose.

That’s the base case of what happened and why everyone, except me, was in panic mode. You might wonder why I wasn’t worried, but first let me tell you how this whole drama fueled weekend gets even more interesting.

The announcements made by the Trump administration on Monday……

Magically, after this horrendous weekend where uncle Johnny and countless others got wrecked in the markets, Canada, Mexico and the Trump administration have decided to post pone the tariffs for 30 days to work out a resolution/new deal.

ARE YOU KIDDING ME????

Could they not have all talked about this together behind closed doors before crushing the public markets?

One of my friends in the crypto game summed it up perfectly claiming how the government just wrecked retail so hard, and it really is true. The people at the end of the table, with no power, no information, and are susceptible to news/media/cascading events just got absolutely wiped. All for the resolution to take place 2 days later, on Monday, after the market opens. This is the definition of pure chaos.

Crypto is a cruel unfair game, and this leaves investors questioning a lot about the forward guidance of the economy and market expectations. Questions will remain until the tariff situation is actually finalized over the next month. While investors are clamoring to gather themselves, Bitcoin has miraculously retraced back up over $101,000 with many alts following in its footsteps (Cardano is back above $0.80).

The lesson to learn here: Sometimes it’s best to do absolutely nothing

What does this all mean for the future of the crypto market, and why have I been pretending to be sunbathing on a Florida beach while all this hoopla goes down?

Because at the end of the day, a few things are true:

1. Price is not the only reason to buy or sell an investment

2. Panic is a short term thing and all market crashes have rebounded

3. Quantitative tightening will end and risk assets will thrive once more

When I look back on every major market crash, or every time it “wasn’t a good time to buy”, if I would have invested more, I would have made more money. Seriously, I would have! And you would have too!

I see only a few future outcomes from this whole mess that occurred over the weekend:

1. US imposes tariffs and hurts our own economy causing US investors to flock to investments outside of the dollar (like Bitcoin, Cardano, Solana, etc)

2. US comes to agreements with other countries and doesn’t impose tariffs; things go back to how they were a week ago

3. US starts QE again in first half of 2025 so the government doesn’t run out of bank reserves backing the market volatility and altcoins rocket

All 3 of these scenarios are good for crypto long term. We also have the first government administration who are openly accepting, and pushing, for the use of crypto in monetary policy, such as strategic reserves. Furthermore, the current administration will do everything in their power to maintain a strong dollar (and not have investments leave US borders).

These major overarching themes allow me to be on a beach sipping cold drinks and soaking the sun up (metaphorically in my head) because they over power the drama that comes with day to day investing. If you want to be a really good investor, you have to make decisions that do not falter when news like this comes about. Can this news impact your investments and change the “best” investments to be in? Of course it can! But it doesn’t mean that you panic and abandon everything over a weekend without any further analysis as the administration is shooting off half baked twitter updates.

After the mess this weekend, I rechecked all my current investments, charts, and strategy for a total of 30 minutes and then concluded that altcoin season will most likely still come. With QE on the horizon, I think altcoin season has a more than likely chance of happening in 2025 than not happening at all.

Furthermore, Bitcoin’s risk levels are nothing compared to previous cycles, and the timing of the BTC cycle top is no where near on average with previous cycles. Can this eventually break the pattern, definitely, but I am not going to bet on it. I will make Bitcoin force the change without me constantly questioning if the change is happening.

If Bitcoin were to break below the bull market support band, set lower highs, and sentiment in the crypto investor class started shifting, I could consider an early cycle top at around $108k Bitcoin, but so far none of those have happened to allow me to consider a position change.

On riskier assets, like Cardano, the downswing had more of an impact. I want ADA to hold between the $0.70-$0.80 level to maintain its current bullish path long term. If it breaks this level, more analysis and decisions will be required, but so far that is not the case.

In times like these, I always remember why I bought ADA (or other cryptos) initially and how that changes as price changes. The answer: it doesn’t change much at all. When you base your investments on fundamentals, a low price doesn’t mean you sell everything. This is simply a time to reanalyze and observe as the market works.

What do I think you should do?

1. Mostly nothing

2. Recheck your investments and understand why you hold them

3. Check how their chart is holding up

4. Go on a crypto information diet

The worst thing you could do is panic and do too much. Too much analyzing, too much selling, too much worrying. None of that will change the market as it is and could hurt your portfolio by causing you to exit the market or change investments.

I wouldn’t be surprised to see some magical outcome happen where everything is beautiful and perfect again in 30 days followed by a monster rally in crypto and the markets. That would tie in perfectly with the crypto hype cycle monster that is brewing.

I would keep my eye out on some major things that could signify a change in market direction (back down) but only put about a 25% probability on those ideas happening.

As of now, I am still all in on the path to 100x- ing my crypto portfolio through native ecosystem tokens, and I think this could be one of the last major drops before this happens. The hardest part is that we don’t know the exact timing of it all, but can only estimate. Until then, don’t get too caught up in the news and drama of the crypto world. I think it’s much better to pretend none of it is happening at all.

Thanks,

Dawson