Geopolitical risks combined with policy intervention panic! Bitcoin falls below $115,000, Trump mobilizes nuclear submarines and pressures the Fed, triggering market dumping.

Due to Trump's sudden announcement to deploy two nuclear submarines in response to the escalation of the Russia-Ukraine situation, as well as his public pressure on the Fed to significantly lower interest rates, Bitcoin plummeted to a weekly low of $113,164 on Friday, triggering over $200 million in long orders getting liquidated. Trump accused the Bureau of Labor Statistics of falsifying employment data and called for the impeachment of Fed Chairman Powell, labeling him a "stubborn fool." The unexpected resignation of Fed Governor Kugler opened the door for Trump to install his confidants. Amid rising market risk aversion, Bitcoin's correlation with tech stocks has strengthened, and the "digital gold" narrative has faced short-term setbacks. However, Bridgewater's Dalio suggested a portfolio allocation of 15% in gold or BTC to hedge against the risks of U.S. Treasury bonds.

Geopolitical black swan strikes, Bitcoin daily big dump triggers 200 million Get Liquidated Last Friday, the price of Bitcoin fell below the critical support level of $115,000, reaching a low of $113,164, a new low in several weeks, triggering over $200 million in leveraged long orders liquidation. The immediate catalyst for this sharp decline was Trump announcing on the Truth Social platform that due to the "highly provocative remarks" by Dmitry Medvedev, Deputy Chairman of the Security Council of the Russian Federation, he has ordered two American nuclear submarines to be deployed to the relevant region. This move was a response to Medvedev's criticism of Trump's ultimatum to "end the conflict within ten days"; the latter called Medvedev's remarks a "step towards war." Trump further warned that "words could lead to unintended consequences," and the market quickly reacted to the heightened tensions among nuclear powers with a sell-off in crypto assets.

Trump opens fire on two fronts: accuses of falsifying employment data, forces the Fed to cut interest rates The market turmoil is also attributed to Trump’s fierce criticism of U.S. economic institutions. He publicly accused the Bureau of Labor Statistics Director Erika McEntarfer of manipulating employment data to assist Harris before the 2024 election, demanding her immediate removal, and claimed that the bureau was “falsifying job numbers” to inflate growth. He further pointed his finger at the Fed, criticizing its chairman Powell for refusing to cut interest rates for political reasons before the election, calling him a “stubborn moron,” and unusually demanding that the Federal Reserve Board of Governors “bypass Powell and make significant rate cuts directly.” This move breaks the tradition of presidential non-interference in the central bank, raising concerns about policy independence.

The Federal Reserve Board of Governors unexpectedly resigns, and the independence of its policy is further eroded As political pressure reached its peak, Biden-appointed Federal Reserve Board of Governors member Adriana Kugler announced her resignation on Friday, ending her term 18 months early. Kugler did not specify the reason for her departure, only stating that she would return to Georgetown University. She had previously supported keeping interest rates unchanged to observe the impact of tariffs on inflation and was absent during the voting at this week's policy meeting, while two Trump-appointed governors voted in favor of a rate cut. Her departure opens the door for Trump-nominated loyalists to fill critical positions, further challenging the independence of Fed policy.

The correlation of risk assets has increased, and the "digital gold" safe-haven aura has temporarily faded The recent decline in Bitcoin highlights its high correlation with tech stocks rather than its traditional safe-haven asset properties. Amid escalating tensions between the US and Russia, trade frictions, and weak economic data, investors are turning to cash and short-term government bonds for shelter. Although gold prices remain stable around $3,350, Bitcoin has failed to demonstrate its alternative safe-haven functionality. There are clear signs of cooling in the derivatives market: the monthly futures premium rate for Bitcoin has narrowed to 6%, down from earlier highs this month, reflecting a waning enthusiasm for leveraged long orders. Despite the price being only 7% off the historical peak of $123,182 reached in mid-July, geopolitical uncertainty is putting pressure on short-term sentiment.

Dalio Adjusts Position: Recommends 15% Portfolio Allocation to Gold or BTC Despite the increased market volatility, some traditional financial giants are reassessing the long-term value of Bitcoin. Ray Dalio, founder of Bridgewater Associates, has changed his previously skeptical stance, stating in a recent podcast that to hedge against the U.S. "debt doom loop" (the Treasury predicts an additional $12 trillion in debt next year) and inflation risks, investors could allocate up to 15% of their portfolios to gold or Bitcoin. He acknowledged that Bitcoin remains volatile and faces regulatory issues, but its store of value function is becoming "hard to ignore."

Conclusion: Trump's political maneuvers have become the largest source of disturbance in the crypto market in the short term, with nuclear deterrence rhetoric and threats of Fed intervention compounding, exposing Bitcoin's vulnerability under extreme geopolitical risks. The resignation of Kugler signals an increase in the risk of Fed politicization, and the uncertainty premium in monetary policy will continue to suppress risk assets. Although the "digital gold" narrative is temporarily hindered, the allocation suggestions from traditional capital giants like Dalio highlight the strategic value of crypto assets against the backdrop of a debt crisis. Investors need to closely monitor the progress of the Russia-Ukraine situation, personnel changes at the Fed, and fluctuations in the U.S. Treasury market, with the primary goal of short-term operations being to reduce leverage and guard against black swan impacts. Changes in on-chain stablecoin reserves and the futures funding rate turning negative may serve as leading indicators for market sentiment recovery.