Long-term impact of Trump tariff policy: End of Cornwave cycle and qualitative change in Bitcoin

Author: Yang Ge Gary

Cornwave nodes, change in characteristics.

Trump's tariff policy has caused turmoil and strong uneasiness in the global market. The VIX index reached 52 on April 8, but it is obvious that this is far from releasing the overly complex superposition contradictions at this stage. Fiscal and monetary policies currently seem to only provide short-term emotional value. When the debt-to-stock exchange triple killing environment is panicking per capita, the asset allocation problem is also in a desperate situation. What should I hold now? It seems to have become a problem that everyone is concerned about in 25Q2.

When will Bitcoin rebound and rise again? This should be the most asked question everyone asked when attending the Web3 Festival in Hong Kong in the first two weeks of April. In many Panels and Meetings, everyone will ask questions and think about how Trump's tariff policy will affect the Crypto market and the direction of Trump prices. The simple question To be honest is not easy to explain, so I came back to write this article for your reference.

tl;dr

1. The problem of bond stock exchange triple killing and the failure of Merrill Lynch clock
2. Comparison between Thucydides Trap and the End of the Five History Cornwave Cycles
3. Greenspan's Prophecy and the Significance of Crypto at the Intersection of the Cornwave Period
4. What is the real Thucydides trap this time
5. Bitcoin’s correlation transition with chaos: the shift in inertial cognition and similarities to the Merrill Lynch clock problem
6. The essence of the second curve of Crypto growth

1. The problem of bond stock exchange triple killing and the failure of

Merrill Lynch clock

Why did Trump adopt extreme tariff policies? Simply put, this looks very MAGA, which can reduce import dependence, stimulate employment and mobilize political sentiment. Unfortunately, the American people are not just little pinks. The high inflation and the 1.3 trillion fiscal deficit are not a good soil for everyone to "make in the United States". The real survival problems are imminent and irreconcilable. Under the condition that fiscal and monetary policies are no longer easy to use, it can be said that tariff policies are already the worst-case scenario that cannot be played without a license. Buffett also pointed out in a recent interview: "They (Tariffs)'re an act of war to some degree." Although many of Buffett's ideas are outdated in the paradigm of the next era, the judgment of this experience is still very accurate. The whole world is at the node of the interweaving of a new Komwalk cycle. The peace and credit system after the war has collapsed, and the reshaping of new mechanisms under the chaos has begun.

In addition to the high VIX index, bond stocks and exchange rates fell at this stage, which is a relatively obvious signal. During this meeting at the Hong Kong Web3 Festival, I was happy to discuss in depth the historical similarity of the debt-to-equity and foreign exchange triple-killing in 1929 and 1971 with Dr. Yi. The various economic indicators and external environments at these two points in time are very similar to those in 2025. In the end, it is a script that follows the Great Depression + local war, a script that confronts the Cold War, or a brand new independent script, which depends on the performance of safe-haven financial assets, especially gold. The so-called Tun Gold in Troubled Times is the characteristic of interleaving time points in this Komwat cycle. It should be noted that the yellow metal properties at this time are completely different in dimensions from the commodity attributes during the overheating period of the Merrill Lynch clock.

According to the standard view of Merrill Lynch Clock, the stagflation period from stagflation period to recession period is a process of converting from cash to bonds to king, and inertia everyone is waiting for the subsequent recovery period, that is, a new round of growth in stocks. Obviously, we are not in this state at present. The external environment does not meet the conditions for entering a recovery period, and the Merrill Lynch clock cannot continue to operate downward. At this time, gold repeatedly broke record highs, and it was obviously out of the logic of the Merrill Lynch clock. We can also compare this with other commodities and find that crude oil, silver, copper, soybeans, rubber, cotton, rebar, etc. have maintained a level of flat or slightly higher year-on-year compared with before the epidemic, which has widened the gap with the increase in gold.

The failure of Merrill Lynch clock shows that the economic policies and market experience at this stage will be separated from conventional expectations. Trump's introduction of tariff policies at this time is just a passive driving force for historical laws from a macro perspective.

It is worth adding three points: ① Merrill Lynch clock failure is only in the environment of cross-comb wave cycle nodes, but the objective laws of Merrill Lynch clock are still valid in the right external environment; ② In cross-comb wave cycle, there are still other types of safe-haven financial assets besides gold. For example, it is not accidental that a lot of money around the world has been looking for quantitative funds and CTA strategies recently. Of course, whether Bitcoin will prove that it is "digital gold" at this opportunity to break through the positive correlation with other types of financial assets and develop independently, we will wait and see; ③ At cross-comb wave cycle nodes at different historical stages, the failure of Merrill Lynch clock is not so aligned, and it is not important in terms of law. Of course, if in terms of specific asset allocation, some asset management companies and FOs are still using the previous inertial strategies, then we must pay attention to it and make timely adjustments.

2. Comparison between Thucydides Trap and the End of the Five History

Cornwave Cycles

In 2020, I summarized a picture to describe the industry changes and geopolitical environment comparisons under the five Cornwave cycles in history. However, after all, few people have experienced the intersection of two Cornwave cycles, so until today, it has become more intuitive when you personally feel the impact from the economic and policy side.

According to past history, the interlaced points of the Cornwave cycle usually lead to the intensification of the conflict between the Thucydides Trap or the imaginary enemy of the Thucydides Trap, and this time is no exception. But this time it fell into two countries with a relatively large gap in historical civilization paths. It is natural that Trump's tariff policy has fermented into this result at this point in time.

The following table shows the comparison of the end time points of the 5-time Combwave cycle:

(Note: Both sides of the Thucydides Trap are expressed in the order of Ruling Power – Rising Power)

As long as the perspective is extended, the failure of Merrill Lynch clock and economic policies will appear very natural, because the energy confrontation at the junction of the Cornwave cycle is obviously much greater than the changes in the economic cycle under the Merrill Lynch clock. Therefore, this interlaced node will directly smash the Merrill Lynch clock in the road and enter the chaos stage.

Intuitive comparison, our situation and the next decade we face will be very clear at a glance. We will no longer discuss similar paradigms. At this time, we need to think about several paradigms: ① Will the digitalization of new technological paradigms and AI bring about innovation in global production relations and governance methods? ②Is China and the United States really the Thucydides trap? ③What role does Bitcoin and Crypto play in the above two questions?

3. The significance of Crypto at the intersection of Greenspan's

prediction and the Cornwave cycle

Similar to the tariff policy at the historical Cornwall interleaved nodes, Trump's tariff policy this time will also trigger a butterfly effect to a certain extent. Whether it is the economic issues within the United States or the handling of Sino-US relations, once it is not silky and reasonable enough, it will definitely trigger the transmission effect of the outbreak of the chaos.

However, this time the failure may not be just the Merrill Lynch clock at the Cornwave cycle interleaving point mentioned above. From a longer-term perspective, as the new paradigm of digitalization and AI gradually changed the essential structure of production unit composition and labor organization in the two hundred years after the Industrial Revolution, FED will also face severe challenges of failure or at least change and transformation through monetary and fiscal policies under traditional experience, and even affecting the management of the global stable economic and trade pattern.

Greenspan mentioned in his 2013 reflection book The Map and the Territory: Risk, Human Nature, and the Future of Forecasting:

“We must accept that monetary and fiscal policy cannot permanently boost economic growth in the presence of deeply rooted structural constraints.”

(“In the presence of deep structural constraints, monetary and fiscal policies cannot permanently drive economic growth.”)

It is speculated that most people have recognized or at least felt at this stage that the world is now facing very "deep structural constraints". The global pattern and economic policy methods that have evolved to this day after the Industrial Revolution are increasingly unable to match the needs of digitalization and rapid development of AI. Since entering the rapid outbreak of the digital and AI era, production tools have changed exponentially. Coupled with the development of Crypto Market and Degen in 2009, the energy accumulated by productivity and production relations will obviously burst into qualitative changes at this fragile Cornwave cycle intersection point.

It is difficult to say that Crypto and Blockchain Protocol Management will quickly take over all the corresponding economic policy governance work under the previous paradigm from this node, but it is obvious that this is an unavoidable trend. It is very likely that in the next few decades, the world will continue to be in a binary parallel governance structure, that is, Crypto and Blockchain Protocol Management continue to grow or dominate part of the global economy, finance, transactions, settlements, and even social governance. At the same time, the social and economic management under national sovereignty, including monetary and fiscal policies, will still be managed parallelly in part of the region in accordance with the original cultural methods and interest needs. This also responds to the current resolution direction of the "main contradictions in the global world" mentioned in the article "The Storm Changes in the Structure After Trump's Winning".

In summary, Crypto has great significance at this intersection and turning point, and will change the global economic and social landscape in all aspects.

4. What is the real Thucydides trap this time

I don't think that the Thucydides trap at this stage is between China and the United States. It does not mean that the economic scale between China and the United States does not constitute competition, nor does it mean that the greater confrontation of strength will be carried out between the West and Islam as Huntington said in "The Conflict of Civilizations". This paradigm leap is obviously a change beyond country and race.

I remember that as early as 2014, a famous Korean investor friend who invested in Kakao told me that he believed that the global big cities are not much different, and the consensus on civilization among many countries and domestic cities has exceeded the consensus among cities in many countries. This has been further proved by the formation of consensus between Digital Nomads and Degen in recent years.

When looking at historical laws such as the Thucydides Trap, on the one hand, we must compare the similarity of historical paradigms, and on the other hand, we must also look at the correspondence of the paradigms based on the perspectives of technology and production changes. Especially at this interlaced node that breaks the "deep structural constraints", in fact, the differentiation of China-US management positions is not greater than the essential differences between TradFi and DeFi, nor is it greater than the differences between the law of the sea and Crypto Protocol, nor is it greater than the differences between the conservatives and Degen.

As I mentioned in a previous article: "Most countries and stakeholders in the world are still in the environment of semi-feudal and semi-centralized state capitalism, and the current main contradiction is making it transition to the environment of semi-centralized state capitalism and semi-decentralized digital information management." The current global Cornwave cycle interleaving points and the momentum of change accumulated by contradictions, the upcoming paradigm change trends must point to the latter.

Looking back at the changes after the past five interleaving points, chaos and reconstruction, the soaring of hedging assets, and the rapid development of a new generation of production technology in the process of change are inevitable trends that will occur. The difference is that although the energy accumulation this time is stronger and globalized, the direction of this change is decentralized and systematic abstract. Therefore, in response to the question in paragraph 1, I think this time (energy burst at the node) is more likely to be facing a brand new independent script, the global chaos will be very high, but the targetedness of the confrontation will not be particularly concentrated.

5. The change in correlation between Bitcoin and chaos: the change in

inertial cognition and similarities to the Merrill Lynch clock problem

In such a context, Bitcoin has obviously made all the titles of "digital gold". However, the historical development is tortuous. As of 25Q2, in the environmental trend of increasing chaos and panic, Bitcoin's risk-averse ability is still slightly inferior to gold. When the chaos increases, it still has a similar decline performance with bond stocks and foreign exchange, that is, the price is negatively correlated with the chaos.

The question of how confusion should be defined is not expanded here. VIX can be an important factor indicator. In addition, the MOVE index, hidden volatility of various assets, Libor-OIS interest rate spread, gold price volatility, FED and central bank interest rate divergence, the proportion of countries with negative interest rates, the war risk index and the degree of global trade break can all be used as reference.

The problem that causes negative correlation with the degree of chaos is of course mainly determined by the holder's mentality. This shows that at least half or more of Bitcoin holders are still holding the mentality of asset appreciation or simply speculative gambling (why it may be close to half? It is because a large proportion of Bitcoin is locked up positions or lost private keys for a long time, and there are also cases where they are unwilling to worry about it and are too lazy to sell. These two types provide positive correlation irrationally), and the turnover rate of these people is still very high.

However, no matter what, judging from the data in the past six months, the performance of Bitcoin and all other counterfeits has been very different. Although Bitcoin and various counterfeits are not negatively correlated, Bitcoin's ability to resist declines in various environments has gradually become prominent. A very important point is to face the current environment where chaos continues to increase after the end of 2024. This also shows that the correlation between Bitcoin and chaos is quietly changing, the negative correlation between them is weakening, and the positive correlation is constantly increasing.

Since Trump took office in his second term, he has signed more than 100 executive orders and has continuously implemented loose policies for the Crypto industry. In addition, the recent ignition of this tariff policy has helped to ignite, these actions have promoted the occurrence of the interlaced points of the Cornwave cycle and entered a strong confrontation between the old and new cycles. Of course, this will also help to achieve an accelerated reversal of the correlation between Bitcoin and chaos. As of mid-April 2025, the SEC has officially revoked the lawsuit against several Crypto projects, including Uniswap, Gemini, OpenSea, Kraken, Consensys, Cumberland, Coinbase and Ripple; in addition, the FDIC and OCC have also made significant adjustments to the supervision of banks' participation in Crypto business, and have cancelled the requirements for approval and declaration for banking to develop Crypto business. The benefits of these contents are still not digested by the public in the current panic in the chaotic environment, and the 2.6 trillion market still has many factors not being Price in (this does not include the rapidly developing RWA and PayFi markets mentioned later).

Standing at the end of garbage time in history, we need to think about two questions now: ① Will there be a round of emotional decline before Before forming a positive correlation with chaos? ②How long will it take for Bitcoin to form a strong positive correlation with chaos like gold? Burns are often required to change the market and public inertial perception, and this transformation process usually takes a considerable time if it is smoothly implemented, and is obviously not allowed at the current historical intersection. Of course, Bitcoin has always used an anti-cognitive approach to alert the education market and participants, so in the future, extreme markets or abnormal knowledge markets are likely to appear.

Similar to Merrill Lynch clock, Bitcoin has also formed a four-year bull and bear conversion cycle in the Crypto market due to its own halving. From the perspective of emotional transformation and asset class selection preferences, the process is very similar, but it is only 2.5 times faster. However, after 16 years of four cycles of development, irregularities have also appeared this year, so many people think that they are already famous and real bears, and classify the failure of the strategy as a result of ETF entry and Meme's confidence collapse. In fact, in essence, I think this is all related to the energy intervention of the interleaving points of the Cornwave cycle, that is, the current global chaos also destroyed the original laws of the Crypto market at this time. The past four cycles have made people familiar with the operating rules of Bitcoin and Crypto Market, and have successfully won the strategic reserves and professional institutional allocations of countries around the world. At this time, it is perhaps the best time for Bitcoin to stand out and become the qualitative change in digital gold.

In summary, as a radically changing historical Cornwave cycle interleaving point, we may experience a brief decline that breaks four years of original cycle experience, but we will soon see a qualitative change in Bitcoin that is positively correlated with the degree of chaos, and thus drive the great development of the entire Crypto market in the next stage, that is, the second curve of Crypto growth.

6. The essence of the continuous growth of the second curve of Crypto

growth

In the Hong Kong Web3 Festival in early April 2025, RWA Topic has actually surpassed the heroes and successfully broke some of the tinted glasses of Native Degens in the previous cycle.

The search for Real Yield and sustainable development has gradually become a new consensus on Crypto Market since this year. History is forced to do so, because after experiencing the baptism of Meme and BTCFi narrative in 2024, it is basically difficult for people to believe if they are not connected to Real Yields and Real Applications alone.

I mentioned and discussed some phenomena and initial reasons for the rise of RWA and PayFi in the previous article "The Second Curve of Crypto Growth". Through this article's description of the junction of the Cornwave cycle, we can understand that the more essential reason for this trend is that the institutional demand for new cycles and new paradigms is irreversible under chaotic changes.

Many people are worried about a question at this stage, whether RWA and PayFi will be as flashy as other narratives and will never reincarnate again. It is clear that unlike narrative renovations and void pledges, long-term institutional things will continue to be worth.

As of 25Q1, a large number of actual PayFi application scenarios and RWAFi funds have begun to emerge rapidly. The rapid development of new generation projects, protocols and public chains such as CICADA.Finance and Plume will bring overall changes to the market in 2025 and will lay a sufficient foundation for the continued growth of Crypto's second curve.

Trump's tariff policy is actually just a butterfly effect, but there will be historical opportunities at the intersection of the Cornwave cycle caused. The expectation and implementation of the reversal of Bitcoin's correlation with chaos will become an important factor driving the growth of various Crypto second-curve industries, including RWA and PayFi, representing the beginning of Crypto and Blockchain Protocol Management gradually deepening the global economy, finance, transactions, settlement and various social governance work in the first stage after entering the new Cornwave cycle.