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April is here.

Welcome to the March update for Comma Partners.

Lots happened in March, but it’s what happened in the first few days of April that are the most important.

Was April 2nd truly Liberation day?

Let’s talk about it.

State-of-the-union

For the month of March:

Crypto:
- BTC (-3%)
- ETH (-19%)
- SOL (-13%)
Equities:
- S&P 500 (-6%)
- NASDAQ (-8%)

Tariff-ied

Ultimately, tariffs, the market’s response to them, and what happens as a result, is the most important topic at hand.

The first thing worth noting is that I believe U.S. equities and crypto will respond differently to tariffs - or at least move more independently than they have in recent months.

Take a look at how things have moved since the tariff announcement.

While I believe it’s far too early to draw any long-term conclusions about crypto’s impending outperformance through this tariff mayhem (note that this was snipped around 4pm ET on Saturday, April 5), it’s an interesting sign.

Tariffs are an important step for crypto - a technology and asset class that exists outside of the traditional financial system.

There are no tariffs on crypto.

In fact, my view is that the world is increasingly coming to realize the benefit of a neutral, independent, and non-sovereign system.

Let’s first jump into some takeaways from the tariff decision, then I’ll get into some of the macro signals to back it up and add more context.

My POV

I think it's very likely that we don't see tariffs actually executed at the high levels included on the hilarious cardboard display board (the likes of which you usually see at a 4th grade science fair).

The rest of the world’s economy is weak relative to the US, and I believe we have to take that into account. I believe widespread retaliation is unlikely.

While I do believe we should very much take these tariffs seriously, I do think Trump will make deals to bring tariffs down. The administration isn’t playing around, setting the initial stance very harsh, but Trump always looks to make a deal.

These tariffs do have a cost, however.

Trump is risking stagflation - slower growth + higher inflation.

Inflation

Most of the narrative I’m hearing is that inflation is a massive risk as a result of these tariffs.

I’m less convinced. This is for a couple reasons.

First, tariffs are theoretically a one-time price increase. Even if material, once these increased costs are processed by the economy at large, they’re behind us.

Sure, prices are re-set higher, but they’re not continually inflating each year thereafter.

Second, I don’t believe inflation as it stands before tariff impacts is an issue.

The March 12 inflation reading came in cooler than expected, and materially lower than the last reading.

Truflation is sitting at 1.3% today, and dropping.

The Truflation reading typically leads the official Bureau of Labor Statistics inflation numbers by ~45 days. If that remains true, the next inflation reading (on April 10) corresponds with the February 24th Truflation reading of ~2.3%.

So, we’re starting from a lower base, and with the the extent to which the inflationary impact of tariffs is debatable, I think growth is the more relevant risk.

Growth

More friction for businesses and consumers means, simply, less growth.

More friction necessitates the metaphorical survival instincts to kick in, meaning more focus on preservation, less risk-taking, and less growth-seeking.

Growth requires investment.

Less investment, less growth.

In my view, growth impacts of these tariffs are the bigger risk.

Slower growth ripples through every layer of the economy. And it’s a feedback loop.

Businesses pull back → weaker business performance → weaker job market → weaker asset markets → net worths go down → less unnecessary spending → weaker business performance → repeat

Weakness begets weakness.

This is the real threat of tariffs.

This is what asset markets are responding to.

This is what could lead us into recession.

Why risk it?

Trump and Bessent (Secretary of the Treasury) have been very clear about their goal.

They want the 10-year rate lower.

The US government has ~$9T - that’s trillion, with a “t” - of debt maturing in 2025 that they need to refinance. Every 1 basis point (0.01%) on the debt is equal to almost a billion dollars of interest per year.

When Trump came into office in January, the 10-year rate was ~4.6%.

Today, it sits at ~4.0%.

That’s a savings of ~$55B - that’s billion, with a “b” - per year of interest costs.

Trump has also stated that he believes that the tariffs will work to re-shore American industry as well as raise revenue to help combat the ~$2T - that’s trillion, with a “t” - annual deficit that the US runs each year.

(There’s a very real debate over whether all these goals can work in concert or if they’re mutually exclusive. I’ll spare getting into the weeds on this one to cover what are in my opinion the more relevant points for our purposes.)

It’s clear that the Trump administration is willing to inflict pain in an effort to accomplish these goals.

How much pain?

That’s the question.

To recession or not to recession?

Asset markets are reflecting deep fears of a recession.

Since the tariff announcements at 4pm ET on April 2nd, The S&P is down (-10.5%) and the NASDAQ is down (-11.0%). From their February highs, the S&P 500 is down (-17.5%) and the NASDAQ is down (-21.5%).

So, are we going there?

Gun to my head, if I had to guess by year-end if we’re in a recession or not - a full-scale crisis with skyrocketing unemployment and sustained negative GDP growth - I’d say no.

Since rates are still high, if we get truly close to (or into) a recession, the Fed will ease materially to support the economy. They have a lot more room to play with than we’ve had in the past to bolster this maneuver if needed.

For context, when COVID hit, the Fed funds rate was ~1.6%.

Today, it’s ~4.3%.

We’re also starting from a base of record-low unemployment (4.2%), driven by a labor shortage in key industries, supported by a precipitous drop in immigration as a result of the new administration’s policies.

Another reality that’s often overlooked is that our economy is ~80% services, and ~20% goods. In 200, ~68% of our economy was services.

So, the tariffs, dramatic as they might be, are increasingly less recessionary as our economy becomes increasingly more services-driven.

We’re grounded in a pretty resilient starting point to shoulder the new tariff regime.

Macro

Broader macro signals are still showing a ton of strength, and are in fact improving (from the perspective of a crypto/risk asset investor) in response to the tariff announcements.

Weaker USD, lower yields, more rate cuts priced in, all are liquidity positive.

If we avoid a recession, I think the bounce, when it comes, will be dramatic.

The USD

Weakening.

10-year yields

Dropping.

Liquidity & financial conditions

Financial conditions are easing.

Liquidity is rising.

Liquidity leads Bitcoin prices by ~10-12 weeks, and Bitcoin has just about finished pricing in the Q4 2024 contraction.

Zoom out

I think this is long-term bullish for the US and risk assets.

The main question is how much pain we feel before we go up again.

While stock prices may have some more room to go down on these recession fears, when I zoom out, I think the risk of a full-scale economic crisis is low.

My base case is that this is a v-shaped rollercoaster ride that may still take weeks or months to play out.

If we continue to see crypto hold up strongly relative to equities, I get even more confident in a strong 2025 for crypto.

Here are a few things I’ve written last month that I think still very much apply:

So, while we can argue about whether the specific outcomes of all this change are positive or negative, I think what we have to acknowledge is that the cost of uncertainty is real.
So, what does that mean?
It means that, regardless of the actual outcomes of this period of change that we’re in, to the extent that the uncertainty persists - or even increases - we will continue to bear the costs of it.
We are also seeing how newer, more volatile assets at the frontier bear an even steeper cost of uncertainty.
Just look at the February returns I included above. Even despite all the positive headlines for crypto, they haven’t stood a chance against the diffuse uncertainty levied on us all.

Where I stand on uncertainty and fear?
I zoom out.
I see the foundations and fundamentals of crypto improving. I see the regulatory backdrop growing increasingly permissive and supportive. I see a deepening robustness and legitimization in the public zeitgeist and consciousness.
I say that the uncertainty and fear is overblown. The longer the time horizon, the more volatility works for you if it is superimposed against a backdrop of true progress.
Take these fundamentals, sprinkle on an improving traditional macroeconomy macro backdrop, and you can see why I’m positioned for a strong year (and beyond) for crypto.
Remember:
In 2017, BTC had 5 pullbacks (ranging from (-28%) to (-39%)) in the midst of its journey ~23xing from trough to peak.
And in 2021, BTC had 5 pullbacks (ranging from (-20%) to (-50%)) on its journey ~2.5xing from trough to peak.
Volatility is the price you pay for explosive asymmetry.
And volatility goes both ways - but crypto’s asymmetry means up > down over the long run.
I stand by what I said in January:
If we do get a more dramatic dump down to $70K-$80K BTC in the next month or two, I view it as a temporary one before we continue to run.
I believe 2025 is set up for another bullish year.

Where are we in the crypto cycle?

Overall, I’d still give us a green light (if we don’t enter a recession).

None of the 6 technical/valuation metrics below are in the warning zone.

No surprise here given all that’s going on.

These will only matter if we stay out of a broader economic recession.

Bitcoin dominance

Currently: ~62%

Warning zone: ~45%-50% (bottomed ~40% last cycle)

MVRV & Z-score

MVRV

Currently: ~1.9

Warning zone: ~3-3.5 (topped ~3.9 last cycle)

MVRV Z-score

Currently: ~1.8

Warning zone: ~6-7 (topped ~7.5 last cycle)

NUPL

Currently: ~0.48

Warning zone: ~0.6-0.7 (topped ~0.75 last cycle)

Puell multiple

Currently: ~1.3

Warning zone: ~2 (topped ~3.25 last cycle)

Pi cycle top indicator

Currently: not near a cross

Warning zone: when blue line approaches purple line

Some things I’ve been thinking about

Also all on Farcaster

Interesting reads, watches, listens

Craig Mod and Tim Ferriss in conversation

Parcels: an all-time live studio session

Michael Saylor on Bitcoin

Naval Ravikant and Chris Williamson in conversation

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