The Simple Strategy to Survive Trade War Volatility

Trade wars are nothing new for President Trump.

During his first term back in April 2018, his administration announced 10% tariffs on $200 billion worth of Chinese goods. By the end of the year, it increased to 25%.

The White House published a list of thousands of Chinese products that would be subject to trade penalties, including washing machines and leather goods. And it vowed to inflict more economic pain if Beijing took any retaliatory measures.

The market swooned on the news. The S&P 500 and Nasdaq dropped 11% and 12%, respectively, from January-April 2018.

The immense volatility unnerved many of my readers. And I received hundreds of anxious emails from them about a potential U.S.-China trade war.

Here’s what I wrote at the time:

Despite a fundamentally sound economy, both sides continued to engage in saber rattling.

By June 2018, China had retaliated with its own tariffs on $50 billion worth of U.S. goods. President Trump then threatened a second round of sanctions against China.

“After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced,” he said at the time.

With trade war headlines consuming all the oxygen, the market started gagging. After climbing to a high of 2,947 in September 2018, the S&P 500 plunged to a low of 2,317 in December.

Again, I received worried letters from my readers. And again, I told them to focus on long-term fundamentals, not short-term chest-beating by national leaders:

One year later in December 2019, the S&P 500 hit a pre-COVID high of 3,263. That’s a 41% gain in 12 months. And no one cared about what happened in April or August 2018.

Friends, when it comes to investing in any asset, for me it all starts with the long-term trend.

I ask myself if the market’s long-term trend is up or down. If it’s up, the solution to volatility is simple: Buy the dip.

And that’s exactly what we have happening with crypto right now.

Tariffs Have Nothing to do With Crypto

As I wrote last week, President Trump’s aggressive use of tariffs should come as no surprise to anyone.

He used tariffs liberally during his first term. And during the campaign, he vowed to use them again as part of his administration’s more aggressive foreign policy.

The most important thing to understand is that these tariffs have absolutely nothing to do with digital assets. They don’t target crypto or the underlying technology.

So why is crypto selling off with the broader market?

One word: Uncertainty.

Markets hate uncertainty. And when there is uncertainty in geopolitics or the economy, it creates volatility.

During these high-volatility times, investors rush to sell risk assets.

Cryptocurrencies, including bitcoin, are considered risk assets. And because they have near-instant liquidity (meaning you can buy and sell them 24/7, 365 days), they’re among the first assets to sell off.

The question we have to ask ourselves is whether this sell-off is a temporary pullback or the beginning of a long-term secular decline.

Based on my research, we’re still in a long-term uptrend. And that narrative just got even better.

As I reported on Friday, White House “Crypto and AI Czar” David Sacks held his first press conference as President Trump’s point man on crypto policy.

During Tuesday’s press conference, Sacks said the Trump administration would usher in a “golden age” for crypto. (You can read the full story right here.)

Sacks pledged to provide long-awaited regulatory clarity to the industry. This move aims to keep innovation thriving within U.S. borders.

And he said the administration is exploring the creation of a bitcoin reserve. “We’re evaluating the idea of [a] bitcoin reserve — this is one of the first things we're going to look at in the admin [emphasis added],” he said.

Friends, if President Trump signs an executive order establishing a strategic bitcoin reserve… He’ll officially put the entire power of the U.S. government behind crypto.

And I believe it would accelerate adoption like we’ve never seen before.

This is a true paradigm shift because in the past, the U.S. government has never supported the crypto market.

So what do you think will happen to some of the smaller altcoins when everything suddenly changes for the crypto industry?

You don’t have to be a genius to know they’ll likely skyrocket. That’s the only logical conclusion. But the ride won’t be straight up.

Buckle Up for More Volatility

Friends, the biggest mistake you can make right now is trying to figure out what every headline means for the market.

All you need to do is to look at the big picture. And the big picture is that the Trump administration is bullish for crypto.

My strategy for handling this volatility is simple: If the long-term trend is up, I just buy on weakness and hold good-quality assets.

I use position sizing and stop losses to protect me from black swan risks like company fraud, political upheaval, or trade wars. Other than that, I just go about enjoying my life.

I know this is easier said than done. That’s why I’ve always urged you to use rational position sizing.

Remember, volatility isn’t unexpected when it comes to crypto. It is inherent in this asset class. You can’t have 1,000% moves to the upside without 50-90% moves to the downside.

That’s the price we pay for the chance to make life-changing gains without putting your current lifestyle at risk.

The key is to position size accordingly. If you’re a smaller investor, consider $200 to $400 per position. And if you're a bigger player, consider $500 to $1,000 per position.

If you bet more than you’re comfortable losing, you won’t be able to survive these periods when volatility cuts against us and punches us in the mouth like it’s doing now.

But this volatility is temporary. As I shared above, the long-term trend is in our favor.

Now that Sacks has laid out a clear path for crypto regulation, I expect the big banks to start offering all manner of crypto products from loans to custody to hedging instruments.

This flood of new ETFs and bank-supported products will create a railway for enormous amounts of institutional capital to flow into the crypto market.

The way to take advantage of this pullback is to buy beaten-down tokens that will benefit from the launch of these products.

Over the past decade, I’ve developed a research process designed to identify these types of ideas. And right now, my research has identified a subsector of the crypto market that is about to get an explosive boost from an imminent catalyst.

I call it “The Convergence.”

The Convergence is the confluence of three generational trends that will remake the leadership of the crypto markets.

They include the launch of crypto ETFs focused on this small subsector of tokens, which we believe are on the horizon, and a friendlier regulatory landscape.

You can click here to get additional details.

Now, I don’t have a crystal ball. So, I can’t predict which specific tokens will see the greatest returns. The good news is that you don’t need a crystal ball to make money in the digital asset class.

All you need to do is apply our research process, build a portfolio of high-quality assets, use sound risk management, and just let the long-term trend do the heavy lifting.

Let the Game Come to You!

Big T