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TheBRRR’s Thoughts 

GM.

The carnage continued today in yet another volatile session, leaving all bulls bloodied and “Magnificent 7” investors $800B poorer on the day and $3.3T poorer since the top.

Meanwhile, U.S. regulators have quietly freed banks to embrace crypto and Trump has signed an EO to create a strategic bitcoin reserve. The EO pledges that the US will never sell the 200,000 bitcoin in its possession and that the treasury can explore budget-neutral ways to accumulate additional bitcoin.

Despite the positive news flow, bitcoin continues to trade like a “risk-on” asset, falling alongside big tech.

Over in Asia, Japan’s GDP revisions knocked down Q4 numbers, squeezing the BOJ with weaker-than-expected growth.

China scrambles to fight a deflation with a $41B domestic subsidy, twice the size of last year’s and in-line with expectations.

With the slowdown in Asia coupled with austerity measures in the US, the odds of the Fed cutting interest rates in May jumped from 39% to 50% just today - a bet that the Fed’s patience for weak markets will begin to run thin.

We expect China to ramp up its stimulatory efforts, Japan to reverse course on its interest rate hikes, and the US to cut interest rates sooner and more frequently than the market currently expects.

These action will come in response to deeper pain across asset markets - but the reversal will be swift and will likely begin to happen before stimulus and policy changes are announced.

To demonstrate, here’s a potential path for bitcoin that implies a full retrace of the Trump victory pump down to $70K before bouncing back throughout the second half of the year.

CTA Liquidation Ends, But Market Carnage Persists

• CTAs (big hedge funds running algorithmic trend-following strategies) completed a massive, algorithm-driven liquidation totaling $193B over two weeks, flipping from a net $200B long to a $10B short position in U.S. equities—triggering a Nasdaq plunge of 13% from peak.

• Mag7 tech giants suffered their largest-ever single-day market cap loss ($830B), cumulatively shedding $3.3T from peak valuations amid tariff-driven economic fears and stagflation concerns.

• Nasdaq down 4% in a single day (worst drop since Sept. 2022); Tesla erased all post-election gains.

• Treasury yields tumbled 7-10 bps amid flight-to-safety; yield curves inverted, and VIX surged, underscoring elevated volatility and uncertainty around delayed fiscal stimulus​​.

🚨 U.S. Banks Get Crypto Green Light

• The OCC reversed Biden-era restrictions, now explicitly permitting banks to hold cryptocurrencies and stablecoin reserves without pre-approval, marking a major pro-crypto regulatory pivot.

• This follows Trump’s creation of a strategic Bitcoin reserve, using crypto assets seized from criminals, signaling mainstream financial adoption and bullish sentiment for institutional crypto demand​.

China Battles Deflation with $41B Consumption Stimulus

• China doubled its consumption stimulus package to $41B, targeting select consumer goods like mid-range smartphones and electric vehicles, covering 15-20% of purchase costs.

• Retail sales growth slowed significantly (3.5% last year vs. 7.2% previously), with consumer inflation recently slipping into deflation (-0.1% CPI in February).

• Initial effects already notable: electric vehicle sales jumped 80% YoY; smartphone sales surged nearly 65% in response to earlier subsidies.

• Long-term structural problems remain, as household spending comprises less than 40% of GDP (global average ~60%), highlighting China’s persistent demand-side weakness despite stimulus measures​.

🇯🇵 Japan's GDP Downgrade Complicates BOJ Outlook

• Japan's Q4 GDP revised downward to 2.2% annualized growth (from 2.8%), weakening the case for immediate further interest rate hikes.

• Private consumption stagnated (0% growth), highlighting consumer weakness despite sustained inflation (core-core CPI at 2.5%, highest since March 2024).

• BOJ faces pressure as inflation has exceeded its 2% target for 34 consecutive months, forcing cautious tapering amid global bond sell-offs.

• Japanese 10-year bond yields recently surged to highest levels since 2008 (above 1.5%), reflecting market anxiety about policy tightening and economic stagnation risks​

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.