CRYPTO 101: Crypto Rundown – The Tariff CRYPTO FLASH CRASH... What You Need to Know

Release Date: February 4, 2025

Hosts: Bryce Paul & Brendan Viehman
Episode Title: Crypto Rundown: The Tariff CRYPTO FLASH CRASH... What You Need to Know

1. Episode Overview

In this episode of CRYPTO 101, hosts Brendan Viehman and TiVo delve into the tumultuous events that unfolded over the past weekend, leading to a significant flash crash in the cryptocurrency markets. They dissect the factors contributing to the crash, examine the market's resilience, and explore upcoming events that could shape the future of crypto investments.

2. The Unexpected Crypto Flash Crash

[00:00] Brendan Viehman kicks off the discussion by highlighting the recent "Black Swan" event that shook the crypto markets. He remarks:

“...another Black Swan event. And it feels like every single week we come back, we say, man, what a, what a crazy way to kick things off this week...”
[00:00]

Key Points:

• The crash was primarily triggered by unexpected tariff news that took effect over the weekend.
• Traditional markets were closed, limiting avenues for reaction and pushing investors towards the crypto market’s 24/7 trading environment.
• Bitcoin initially fell but quickly rebounded, surpassing $102,000, while many altcoins saw significant recoveries, presenting lucrative "buy the dip" opportunities.

3. Analyzing the Crash: Root Causes

[03:25] Brendan provides a comprehensive breakdown of the crash's underlying causes:

“...a lot of this escalated over the weekend. And with the stock market closed and indices closed and all that, the only way that people could react, the only way that they could get exposure is by trading a 247 decentralized market like the crypto one.”
[03:25]

a. Correlation with Traditional Finance (TRADFI):

• Brennan explains that there's been a growing correlation between traditional finance markets and crypto.
• Tariffs are historically negative short-term catalysts, leading risk-on investors to pull back, affecting crypto due to its decentralized nature.

b. Strength of the US Dollar (DXY):

• The announcement and implementation of tariffs strengthened the US dollar, as evidenced by the DXY reaching multi-year highs.
• Brendan notes the inverse relationship between the dollar's strength and crypto performance, drawing parallels to past market cycles.

c. Altcoin Volatility:

• Altcoins, being more volatile than Bitcoin, experienced sharper declines—some dropping by 30-50%.
• Brendan attributes this to altcoins' tendency to mirror Bitcoin’s movements but with amplified effects.

4. Record Liquidations and Market Impact

[11:52] TiVo underscores the severity of the liquidation event:

“...the 24 hour wreck 2.32 billion literally setting records. And obviously the majority of that was, was the longs.”
[11:52]

Highlights:

• Over $2.3 billion in liquidations occurred within 24 hours, marking the largest in crypto history.
• The liquidation predominantly affected long positions, emphasizing the market's extreme volatility during the crash.

5. Market Resilience and Future Projections

[15:56] Brendan reflects on the market’s resilience:

“As long as 90k holds, you know, we look at bitcoin dominance, this is another big thing...”
[15:56]

a. Bitcoin's Strong Support Level:

• Bitcoin has consistently maintained support around the $90,000 mark for the past four months.
• The ability to rebound quickly from significant drops indicates strong market confidence.

b. Bitcoin Dominance:

• Bitcoin's dominance surged to 64.35%, the highest since February 2021, reflecting its status as a market leader amidst volatility.

c. Altcoins’ Recovery:

• Larger cap altcoins like Solana and XRP showed notable recoveries by bouncing off their 200-day moving averages.
• Brendan highlights Mantra, a mid-cap altcoin, reaching new all-time highs despite the broader market downturn, signaling potential hidden opportunities.

6. Upcoming Events and Strategic Moves

[25:50] Brendan introduces the imminent press conference by David Sachs, the newly appointed crypto czar:

“...discussing or securing, excuse me, America as a leader in the digital asset economy.”
[25:50]

a. David Sachs’ Press Conference:

• Scheduled for 2:30 PM Eastern Time, the conference aims to outline strategies for securing America's leadership in the digital asset economy.
• Speculations suggest the creation of a crypto strategic reserve, potentially favoring Bitcoin as the primary asset.

b. Trump's Sovereign Wealth Fund Announcement:

• TiVo references a significant move by Howard Lutnick, linking the establishment of an American sovereign wealth fund with substantial Bitcoin exposure.
• The fund's creation could have profound implications for market stability and institutional investment in crypto.

7. Ethereum's Performance and ETF Milestones

[36:10] Brendan shifts focus to Ethereum (ETH):

“These spot Ethereum ETFs seeing all time highs in terms of volume.”
[36:10]

Key Insights:

• Ethereum ETFs reached record trading volumes amidst the tariff-induced turmoil, indicating growing institutional interest.
• Ethereum's performance has lagged behind other large-cap altcoins, prompting discussions about its current state and potential resurgence.

Projections for Ethereum:

• TiVo predicts a significant upward movement for ETH, potentially mirroring previous altcoin surges.
• The hosts express optimism that Ethereum may experience substantial gains, possibly initiating a trend towards all-time highs.

8. Market Sentiment and Investment Opportunities

[38:10] Brendan emphasizes the importance of tracking institutional moves:

“...how can you not be optimistic and bullish after hearing stuff like that?”
[38:10]

a. Following the Leaders:

• Observing actions by high-profile investors and politicians provides insights into market trends.
• Aligning personal investments with these signals can capitalize on large-scale institutional moves.

b. Opportunities Amid Volatility:

• Despite high volatility, the crypto market offers numerous opportunities for strategic investments.
• The resilience shown by Bitcoin and selective altcoins suggests a bullish outlook for the near future.

9. Concluding Thoughts

[43:11] TiVo and Brendan wrap up the episode by reiterating their bullish stance on the crypto market's future. They highlight the importance of staying informed, following market trends, and seizing opportunities even during periods of high volatility.

Final Quote from TiVo:

“...Harvey Dent's quote is a perfect summary for what happened over the weekend, Sunday into Monday.”
[25:50]

Key Takeaway: The crypto market, while currently experiencing significant volatility driven by external factors like tariffs and institutional moves, remains robust. With strong support levels, increasing Bitcoin dominance, and optimistic projections for Ethereum, Brendan and TiVo encourage investors to view the recent downturn as a strategic buying opportunity rather than a signal to exit the market.

Notable Quotes

• Brendan Viehman

  “another Black Swan event… what a crazy environment for crypto.”
  [00:00]

• Brendan Viehman

  “...the only way that people could react, the only way that they could get exposure is by trading a 247 decentralized market like the crypto one.”
  [03:25]

• TiVo

  “...the 24 hour wreck 2.32 billion literally setting records.”
  [11:52]

• Brendan Viehman

  “...as long as 90k holds, you know, we look at bitcoin dominance...”
  [15:56]

• Brendan Viehman

  “These spot Ethereum ETFs seeing all time highs in terms of volume.”
  [36:10]

Conclusion

This episode of CRYPTO 101 provides a thorough analysis of the recent crypto flash crash triggered by tariff news, exploring the intricate relationship between traditional finance and cryptocurrency markets. Brendan and TiVo offer valuable insights into market resilience, institutional influences, and future projections, positioning this episode as an essential listen for both seasoned investors and newcomers seeking to navigate the ever-evolving crypto landscape.