214. Crypto Is Crashing: What You Need To Know & Our Strategy

Welcome back to another episode of the Ben and Bergs Podcast. I'm Ben, your favorite high school dropout and founder of Collective Shift alongside Ms. Bergs, your favorite MBA and CEO of Collective Shift. We're here to bring you world class crypto research strategies and insights to help you crush this crypto bull market. Plus, get an exclusive behind the scenes look as we scale Australia's leading crypto research company. And today we are talking about what everyone is unfortunately talking about, which is the.

Trump tariffs and how markets are in a really, really steep correction at the moment. Across the board. Stock markets, crypto, everything is really selling off. Huge amount of fears, more far reaching than we sort of expected. And you know, global recession is in pretty high probability at this point. Even the US recession, I think we saw poly market reach around 60% today. Uncertainty is really high. You know, investors are very, very concerned, giving very little reason to get into high risk assets like crypto. And that's why we're seeing huge sell offs. So we want to sort of just briefly talk about what's happening. It's been widely spoken about. We're not guys to just come on here and just regurgitate the news, but essentially, yeah, you know, across the board everyone's feeling the pinch. So we want to talk about what we're doing, how we're thinking about the markets, why it is selling off and what, what's to come. Now before we do that, I do have to apologize. I am in an Airbnb bedroom in south of Adelaide. I look like.

Hang on, when you say south of Adelaide, how south?

About an hour, hour and 20, hour and 30 south in a place called Ghoula, I think it's called.

So you're in rural Adelaide, you look about one pixel on my screen, you're very laggy and you're like, nah, no worries mate, we'll do Bennett Berg's just on the road, it'll be fine, it's all good. Hasn't thought about Internet or anything. At least you got a decent microphone. I appreciate that. The background, not so much foreground. I don't appreciate either but it seems to be working then. And look, we're talking about tariffs today. It's all anyone has ever been speak. Been speaking about like the last week and a bit how it's affecting them, their businesses, their investments. There are such wide reaching implications for this and I think we're going to take the lens of how this is going to and how it is affecting the crypto market.

Yeah, we're going to just focus on the crypto specific segment and we'll also talk about, you know, how we're thinking about markets and how we're going to play it from, from sort of our perspective. So really quickly, what basically happened was Trump announced last week sweeping reciprocal tariffs. Nearly 200 U.S. trading partners are setting a 10% universal tariff and imposing higher rates on specific countries like the European Union. So these go into effect or have already basically gone into effect over the last few days. And additionally, the US has imposed a 25% tariff on all automobile, automobile imports as well, effective immediately. Now, what is going to happen from here essentially is what we're seeing play out right now. Markets really selling off. A lot of people are fearful. We don't know how long these tariffs will stay in place. We don't know who's going to retaliate. You know, for example, larger partners like, or larger players like China and the euro. But we're seeing markets sell off across the board. You know, this morning I think we had China open with a 10% down on their stock market. Japan down a lot. Taiwan hit triggers, you know, pausing their stock market. So really like there's a lot of fear and panic across everything to do with, with crypto and, and, and the broader stock market. And I guess, you know, one of the biggest things to note is that.

A lot of the individual larger tech stocks like Tesla, Nike, Nvidia, they're all down 40%, 30% individually. And with the stock market selling off this March, there was very few safe havens that are actually holding up Burgs. I think the fear and greed index is down to some of the lowest seen in a number of years in the stock market.

Exactly right. And let's just talk about real nuts and bolts here. So why is Trump issuing these tariffs? And if we remove Trump from the equation, if you look at, you know, economics, it'll tell you that U.S. has about $36 trillion in debt, which is increasing by trillions per quarter. It's actually pretty insane. And they're only able to just cover the interest payments on their debt. So one school of thought is that you can impose tariffs to get more tax, then you start to onshore more things. So it's made in America, which drives prices up, you get more taxes, eventually you inflate your way out. He's also doing stuff with the government to reduce spending and reduce that $36 trillion debt that's over their heads. The other side of that equation is you can also achieve some things by doing subsidies for American companies. So the government subsidizing American companies to make them more competitive globally. And really if you look back at like the 1960s or even earlier, the trade routes are like 10 trade routes or something. Ridiculous. Right? You could draw them on a map and now there's millions and we've got just in time inventory. We go to China and the stocks that you mentioned with like Tesla, Nvidia, everywhere else, these are global companies. They get, their supply chain is produced in Vietnam, in Bangladesh, you know, all different mining companies for Tesla to get, all the minerals, all of those supply chain inputs now have tariffs on them. And when those products get to the States, they're going to cost infinitely more money. And it is very difficult to do these kind of tariffs the way we are so globally connected, which is why people are shook. The stock market is down because it's not just uncertainty, but every single business and their global supply chains are now affected. Even a buddy of mine, he's been working in for 10 years with one of his suppliers that's in the States and they have a great relationship and, and it's like, well shit, if we're supplying you now and we've got this relationship, I have to go find someone else for redundancy and cheaper like to make cheaper products. Like this is the whole world is shook because the implications are so far reaching. And I think really we're in this state of uncertainty and is this going to work long term? Probably not. Because everyone else would be forced, forced to trade with each other and eventually the US consumer is going to suffer. Or is it more just to shake people up, bring them to a bargaining kind of table and perhaps get better deals globally with the US So it's very interesting thing that's happening, that's the nuts and bolts of it. But in terms of markets, we're really just seeing uncertainty and sell offs across the board. Ben?

Yeah, like The Nasdaq's down 10% over the last two trading days, which is, which is pretty nuts. You know, they hit the Nasdaq, didn't.

They, in like a couple of markets where it's like not too much just turn the markets off.

Yeah, Taiwan turned the markets off. I think Japan did too. It's pretty crazy to see that. And we haven't seen this level of fear or you know, relatively sorry. Even on the relative strength index, the rsi.

You know, we haven't seen this level of fear and overselling since the COVID dump of March 2020 and before that the GFC, which is pretty crazy to Think that tariffs have caused this much of a, of a dump. You know, Covid was about 30% as well. Just for me, like, struggling to really see why we would be at those levels of fear. So for me, like, I think we're far closer to the bottom of this correction than the top. I think that might be pretty obvious, but I think from an investment standpoint, all the alts are getting pretty much reamed and it's why we've been continuing to really push a larger allocation of bitcoin for the last probably 12 months. Bergs like, you know, even though the last three months really not, not allocating pretty much anything to alts, we bought a little bit, you know, on our, on our dca. But I really do think right now, like, if you want to protect your portfolio, portfolio, I'd really be continuing to stack bitcoin and waiting for the stock market to turn around. I don't think bitcoin or crypto is going to lead out, you know, while the stock market continues to sell off. And if the stock market continues to sell off, we could, you know, see crypto retrace even more. So yeah, I think risk off is, is definitely the, the consideration at this point. But if you do have cash on the sidelines, like we've been saying, you don't need to, you know, pick and time the bottom. I think there's going to be a U shaped recovery, continuing to accumulate some of those assets, reduce your overall buy price. Like this is some pretty good opportunities to really reduce your overall entries for a lot of those assets. And do I think the bull market's over? No. I do think that Trump is cleaning out the backyard. He has continued to say that better things are coming. We're swallowing, you know, whatever his terminology was, you know, this is a medicine swallowing event for the stock market transition period, whatever you want to call it. They're talking about potentially emergency rate cuts. These are all things that will turn the market around and give it more confidence. But, you know, yeah, a lot of fear right now.

Yeah. I was listening to a naval podcast over the weekend. He said, if you've got two paths, choose the one that has the more intense pain, but it's for a shorter period of time rather than longer term pain. And this is really intense pain, but I think for a short period of time till people figure it out. And people don't know what this means. And that's why you're seeing the uncertainty. If I've got any business, if I've got any global business, that has global supply chain inputs. I do not know what my costs are. I do not know what I can sell my product for. That is scary.

It's a known unknown and I have to go and justify. I had this many people. Will people buy my product at this price? Do I get new suppliers so I can compete in these markets? Do I go to other markets because the states cost too much for my product to be in these days? So this is the uncertainty we're seeing in the market. The stock market, the stock market is just a group of companies and if we come back to crypto and we look at bitcoin, it's only down 28% from all time highs, which is amazing. That is unbelievable. Ben and I say that bull markets are harder than bear markets. This is why they're in the previous bull market we had several, you know, 30% drawdowns and nothing has changed in bitcoin. Tariffs have been implemented. It doesn't really affect crypto. It can affect discretionary income, those kind of things, but not crypto directly. So again I always come back to like Bitcoin has never been stronger than it is today and that's reflected in the price. And with that framing and thinking long term, I see this as a fantastic buying opportunity for myself. Like it's a really good time to start deploying my self managed super fund which I'm going to do. And I'm actually thankful for this event. And if we look at this like it's dropped almost as much as Covid and is this as bad as Covid? No, absolutely not. This is something that can be figured out over time. It's just going to take some time. Don't kind of fester and live in the immediacy of what's happened. And Ben, you and I were talking before the show just in our very limited lifespans about, you know, in the early 90s we had a recession and high interest rates in Australia. That kind of led onto a dotcom boom. Late 90s, early 2000s led into golden years for the stock market. That's when I started investing. Like the early 2000s you could do anything. I remember the guys just buying like six, seven, eight properties when I first started working. These guys are working government. It was incredible. And then of course you had the GFC in 2007, 2008 and that was a terrible event. So the pendulum swings the other way. And then we have all these darling tech stocks and all this innovation that kind of brings us out through all these capital markets and you know, venture Investing and then we, you know, there are a couple of events along the way and then we get to things like Covid and government overspending, like oh, we go all the way down again and that was 2019, early 2020. And then here we are like five plus years later and we're having another event that shakes the market. But it's been relatively smooth sailing since then. If you look at the trend of stocks since COVID and we need to keep that longer term in mind that this is just a pendulum swinging and we know things will be okay long term. It's just how do I feel in the moment and am I fearful or do I see this as an opportunity? What is the framing opportunity here?

Yeah, and I think too like also the fear can really take over and I think a lot of people will take out and forget the, the reality of what's happening. And this is bigger than just crypto and people are worried that they've round tripped and they miss another top and this, that and the other. But I do see this as like you said Berg, just a correction, a pendulum swing amongst broader trends that are happening in the macro landscape. And the reality is we've been through this in Covid, we'll hear through ftx. This has happened a number of times before and it feels like in the world it feels like you made all the worst decisions, you feel as though this is the end and then you know, a month or two goes on, people sort of forget. We come out, you know, things like rates come, rates come down, we get some good positive news and then all of a sudden the narrative takes over and we go again. You know, bitcoin went on a massive run when after it halved from 10,000 to 4,000 about five or six years ago, it was all over. And then all of a sudden we had a big change in the in, in from the Fed. We had really bullish news and bitcoin went on this run from 4,000 to like 65 or 75,000 over the course of 12 months.

Yeah. And even look what happened late last year, you know, the stars aligned, Trump was elected and crypto just went through the roof. And if you think about what your all time high portfolio was there, let's say you had a hundred dollar portfolio, it's probably 50 or even $40 right now. And that is brutal to look at. But you need to know that this is a long term investment. These things will come back over time and crypto is at the mercy. It's a market, It's a global 247 market. It's at the mercy that think like whatever is happening around the world, that's what we're seeing play out here. But the fundamentals are still there. You can accumulate now. Drive that dollar cost price down and you will be doing well long term. Don't freak out, don't sell off. Just chill. It's okay.

Yeah, I agree. Take a step back, stop looking at the portfolio. It's not going to help. Let this play out. There's no point making massive rash decisions in the peak fear of, of corrections. It's usually where you'll regret it. And I think, you know, if anything starting to think about dollar cost averaging and reducing some of your buy prices for Bitcoin, I think is a good idea. Again, I wouldn't be touching the old coins. We've been very clear on that. Be very careful of adding too early, too soon. But I do think that, you know, prices will come back. You know, things will, things will improve. You just got to try and stay out of the chaos, the noise that is Twitter and YouTubers and yeah, all.

The crazy how rapidly this has happened, right? Like Trump was elected, it was 71 days to tariffs. And if you start to take action now, do you think, how would you feel in a week's time, a fortnight, a month, if these tariffs now roll back this guy and this government moves with speed. They'll. Will they negotiate? Probably. Will they roll them back? Maybe. Will other countries start to do more heavy trade with each other? Probably. There is a lot of solution space here to figure it out. It's only just happened. People haven't figured it out, how to move things around. I mean, we figured out Covid, for God's sake, when no one can leave their house, there's no airplanes, people are dying, hospitals are overwhelmed, supply chains are just shut down. Everyone's working from home. And if you want something, it has to come on a ship and it takes three months to get here. We figured that out. It was okay. This is nothing like that.

And then we've also now like, you know, a guy in the seat that is super pro economy, super pro stocks, He's a businessman. Like he's cleaning out the backyard. And I have full confidence that he's going to want to turn the economy around and get it moving again. Like he's not going to leave his seat as president with just a, you know, what has been, you know, a bit of a bloodbath since he's come in. But he's made a lot of moves he does his stuff around, he makes big changes. But one thing I know about him and one thing that I'm very confident on is that he's going to want the economy to really, you know, be, be, be positive. And the stock market is, is a scoreboard for him. And it was the last presidency as well.

Agreed. And let's not forget that the team around him is quite amazing as well. And if we treat this like a business and let's say a four year CEO cycle, this is the big bath. The new CEO comes in, goes not the other guy was trash. They write everything off. They do their depreciation schedules, they eat shit for a year, they clean the business out and get it structured in the way that they want and then they have prosperous growth from then onward. We saw this with Qantas, with what's his face, the previous CEO. That's what they did. Old guy was crap, come in, depreciate everything, change the schedules, change their business around a bit. And then Qantas went really well for quite a considerable period of time. And if you want to have an extraordinary output, you need extraordinary inputs. And these extraordinary inputs look like heavy, insane change. And it's uncomfortable. Why are they doing this? Tomorrow isn't going to be like today, which was different to yesterday. It's very weird and it's very uncertain and you're seeing that human psychology and reaction play out in the markets. But when you have this kind of plan and you take very, very stern action, this is the response that you expect. Knowing that there is a plan for the future to be better.

Yeah.

And usually when you see these better part is the assumed part. Right. Like that's what we're told. We assume it is going to be there. We think that is going to happen, but again, that remains to be seen.

Yeah. And we also saw in Covid and when we had these big corrections that it really creates really forced hand movements from the Fed and global liquidity to try and you know, improve the economy. Because no, obviously no one wants this to happen. Right. So you know, when we see these big, big dumps and big corrections, we, we tend to see big changes from the likes of the Fed and you know, the, the government wanting to, to really push global liquidity and wanting to, you know, start to have these more positive announcements to, to, to turn things around. So yeah, I think don't rule out like a, you know, a faster recovery out of this. But um, you know, I don't think it's gonna be straight away. And again, could we could things continue to, to worsen? Yeah, of course. Like we're not, we're not here to try and call the bottom. I don't think anyone really knows exactly when this will happen. But again, I think back to this whole thing. It's really important to step back, think long term. This shall pass. This is financial markets. This has happened many times before and, and take advantage of the, of the fear.

This is a really good point that you just made. Like, could you imagine trying to make big change and you are a president or a prime minister of a country. You go to all these meetings, you talk with them, you do the next thing, the next thing, the next thing, nothing really happens. And, but this is one giant lever to get the world's attention and force change immediately. Like you start charging tariffs the next day. It's an absolutely wild thing to do. Yeah. But it gets everyone to the table and they are now taking notice.

Yeah, yeah, he's making big decisions. Farts. He's not fucking around. He wants, he wants movement to be made. And again, markets don't like uncertainty. And that's exactly the, that's all it's been the last three months. But once he gets the back out in order, like we've been saying, it doesn't happen overnight. But once that is in place, you could imagine the, the recovery process is just going to be as hard and fast, in my opinion.

Yeah, yeah. I remember when the GST came in, I think it was 99 or 2000, something like that. Everyone hated it. They're like, why I get $5 extra but I'll pay all this tax and I have to do this? And it makes no sense. And it was, you know, essentially to, you know, raise more money for the government. But then the specifics around what had GST and what didn't, like why does this yoga have it and not this? And like why does this men's health item have it and this women's health items does not. And it was just craziness and it took like years to kind of sort that out. But it was a big sweeping thing that came in. And this is like another thing. It's on a global level, which is very, very interesting. So we'll see how other countries react and how it shakes out. Because it's very easy to have this knee jerk reaction. But then a month on, two months, three months, what does that do to your people for the goods you get from the US or the companies that provide goods to the US does it do for the people that are working how does your economy now work with these heavy tariffs that are on? And that takes time to figure out to settle in till people understand it. And people can start to push back to their government saying it's too expensive to live here or whatever may happen, or companies start to push back or they start to negotiate or they start to have different entities where they can avoid the tariffs and they can innovate around it. That's what we're kind of seeing play out now. And it is straight up uncertainty. That is what we are saying.

Yeah. And I think, you know, rounding this out here is like if you are feeling like you didn't have a portfolio strategy, you missed that opportunity back in November and December. Like you're feeling as though you're probably back in that period where you, you know, you may have stuffed it up again. You know, ultimately like one of the best things about building a strategy is that, you know, one of the things we, we, we, we looked at is short and long term strategies. You know, with your long term holds you're not really too worried about the short term. If anything you're adding to those positions because you know, you can start to really build out longer term positions but like being able to split that out and having a look at shorter term strategies. One of our platinum members, you know, was able to sell to BTC back in November, paid off his mortgage and now he's basically debt free, has, has you know, all the income still from his job and his long term assets. He's still holding like you know, decent six, six figures in his long term stash. But he was able to take out you know, 3, 400 or what was it, 250, 300,000 Aussie back in November. And you know, he's sitting really pretty because he had that short term strategy as well. So coming back full circle, if, if, if you have that plan in place, if you even have a plan, it's going to help you with that confidence that you're actually got.

Sort of a step by step guide on how you're going to play out these markets when we do come back, like do you have that conviction in the assets you have? Do you know the plan you're going to execute when your old coins come back? And have you been able to sort of do something with your portfolio rather than again just watching it all the way up and all the way down again? I think that's the big part that makes this right now. And I say this because I've taken a lot of profits in the past you know, you feel a lot more confident in these periods of time because you've, you've been able to do something with those, with, with the growth of your assets. Right. But again, I definitely do feel for you if you haven't been, been able to take profits off, maybe it's your first cycle. I get it. You just gotta ride it out and know that these are great opportunities to take, take sort of stock of where you're at, knowing you don't wanna feel like this again, and put in like a proper plan in place to help you for that next leg up.

That's such a good point because that person, actually any person, would not know what's going to happen in the market. Right. We can look at things, we can look at previous things and we can have, you know, a pretty good idea. But that person had a goal and they hit that goal. Bitcoin might have gone to 300,000, but they're like, no, I've hit my goal. I'm going to take my money out and I'm going to fulfill that goal and the rest of my money can ride. That is an amazing thing to do. So knowing your goals and when you hit them that way, you're not at the mercy of the market and what might happen next, next. And the other side is if you are long, only if you zoom out far enough. And I always think about a super fund. If you start working in your 20s and you retire when you're 65, that's 45 years. If you look at any chart over 45 years, it is up only. Yeah. But if you zoom into a week or a day or even a month, it can be hyper volatile. You're like, the world is ending. This is absolutely crazy. But zoom out and it's just up and to the right.

Yeah, very, very, very good point. And I think surrounding yourself with people that can help you just remain patient, remain. Logic is definitely what we try and do in our platinum group. And it's why a lot of people end up losing is because they get sucked in the fear and they don't have that sort of, you know, perspective. So, you know, if you are struggling, if you do have a large portfolio, you feel as though you're not really unsure or you're feeling unsure, you know, have a plan, you sort of all over the shop, you're concerned, it feels that you're going to stuff it up again. I really would recommend, you know, booking a call, seeing if it's a good fit. Our platinum program, because a lot of people are making, you know, very good money even when the market has this big correction and they're feeling a lot more calm and balanced and able to stomach these, these downturns. Because, man, when I first started going through these downturns, it felt like the world was ending. And I made some horrible trades buying into people online saying, you know, these crazy sort of, you know, technical analysis, you know, 10 year movements, we're going to retest like 98% down. And you, you buy into that and you start to panic. And, you know, I made some shocking trades back to the day buying into that and then, you know, watching the market run up and now you're on the sidelines. So position yourself with people that have done it before.

Exactly right. And you get to a point where you're unbothered. Like I've seen this before, I know what it is. Here are the two or three levers I can pull to fill the goals that I have. And you just get on with your day. And that takes a lot of time to go through. For Ben and I, it's taken two and a bit cycles to get there and you really do need to. Anyone can, can talk to you about it and they can pass on knowledge, but until you've experienced it, you don't know. And you're much better off if you experience it with that knowledge and learning from other people's experiences, just like we do in business with EO Mate. It's exactly the same thing. And once you've got that, you will realize what it is. You'll hear those stories in your head and you will make better decisions.

Yeah, bang on. So if you want some help folks, you can book in a free call. We can walk you through, see if it's a good fit. We don't accept everyone to the program. We've got about 100, 110 clients we work with now. Not adding, not looking to add too much more to that. But if you feel as though you have a large portfolio, you want some guidance, you want some assistance, you want a strategy, feel free to book a call, see if it's a good fit and if not, you know, continue to, you know, listen to the podcast. You can check out my YouTube channel. We don't always talk about crypto on, on this podcast, but we do when big things happen. But if you want a bit more deeper dive then you over to Ben Simpson YouTube channel. Even the collective shift, we do a weekly podcast. So you know, we put out a lot of stuff for free. If you just want some more support. But yeah, we'll, we'll, we'll be here. We're not selling. Crypto will be fine. Everything will be a fine.

That's it. And the other good resource is a newsletter as well. So there's, we, we've got tons of free resources because we just want to keep people across this. We want to build good crypto citizens, learn from our mistakes, learn a bit about the market and have a much better experience for crypto and stay here long term. That's what we're about. Jump in, start reading and have a good time.

Awesome, guys. Thank you so much for listening. If you have a friend or another investor that is in a bit of a concern point or they want to know a little bit more about what's going on and he feels this was, feel as though this was valuable, we'd love for you to share it with them. It's how we grow the podcast each and every week. And yeah, reach out to us if you have any other content you want us to talk about. There's been a lot of great feedback on the personal finance content. So you reach out to us on Twitter. You can email us. I think you need to message us on the, on the Spotify app now. I think we'll leave a comment or something. Thanks so much, folks. We'll see you next time.

Thanks, champions.