The stock market has been reeling since Trump’s “Liberation Day” tariff announcement back on April 2.
But even before this shock announcement tipped the Nasdaq into a bear market and sent the S&P 500 down 10% in two trading days, stocks had struggled this year as the reality of Trump’s desire to impose tariffs on a wide range of partners and a wide range of goods was increasingly resolute.
In turn, investors had spent much of this year searching for the “Trump put,” or the level in the stock market that would prompt the administration to back off its tariffs plans.
The stock market, however, might not be the place to find a market that would prompt the administration to act.
“The lack of the Trump Put and disregard for stocks has further fueled the relentless selling,” JPMorgan strategists led by Dubravko Lakos-Bujas wrote in a note to clients on Monday.
“However, the Put may have shifted to the crypto market which so far has been relatively resilient.”
In their note, JPMorgan’s team cut their year-end price target for the S&P 500 to 5,200 from 6,500. The firm’s economics team last week became the first on Wall Street to forecast a US recession this year.
Administration officials, most prominently Treasury Secretary Scott Bessent, have talked about Treasury yields as the key financial metric for the second Trump administration, and the idea from Trump’s first term in office that the stock market is a scorecard for his economic policies has been nowhere to be found this time around.
On Sunday, Trump told reporters when asked about the stock market sell-off that sometimes you need to take medicine to get better.
Back in early March, with investors bracing for Trump’s first round of tariff announcements, Bank of America strategist Michael Hartnett floated the idea of a “bro bubble” in stocks and saw the first “Trump put” for the S&P 500 coming at 5,783, or the level that stocks closed at the day of the election.
In afternoon trading on Monday, the S&P 500 was sitting closer to 5,075. Trump put come and gone.
But bitcoin appears to be acting more in the spirit of Hartnett’s call.
Early Monday, bitcoin traded below $75,000 for the first time since early November as bitcoin rallied after Trump’s election win. Stocks recovered some losses through the trading day, but bitcoin’s intraday bounce was more forceful, with the world’s largest cryptocurrency sitting nearly $78,600 in late afternoon trade.
Before Monday’s breakdown, bitcoin had only briefly broken below $80,000 in early March and spent most of the last month holding in the low $80,000s while the stock market slowly lost steam.
Trump’s creation of a crypto strategic reserve may help crypto markets find a bid during times of market turmoil.
But as an asset class, crypto is simply better suited to trading as a sentiment indicator than the stock market. Stocks — which represent fractional ownership positions in real companies — are pricing in the expected real-world impacts of companies across industries and geographies dealing with higher costs and more uncertainty.
There is a sentiment piece to the price of every stock, but the macro backdrop and fundamental complications facing any business as a result of dramatic policy shifts cannot be ignored.
Not so with cryptocurrency.
And while bitcoin has at many points this year traded in lockstep with the overall market — and tech stocks in particular — it has the luxury as an asset class of being able to truly, credibly, look past the earnings-level disruptions potentially posed by higher tariffs and instead reflect the collective id of an investor class trying to find firm footing.
On the day before Trump’s Nov. 5 election win, bitcoin was trading just below $70,000. Since then, bitcoin hasn’t really come close to that level. And until then, we may not see financial markets truly get a sense of where the Trump put lies.
A scary proposition for the stock market. And an emboldening one for Trump.
