Tariffpocalypse is coming on Wednesday. A lot of people are fearing a crash and a bear winter. Here’s why people are panicking, and what could be at play.

Recently, Trump has cranked up his tariff rhetoric by proposing more tariffs on every country, and threatening to go even higher than his previously proposed rates.

Does this mean that he's definitely not gonna back down and tariffs are really important to him, or is he trying to extend his bluff to the fullest?

-Why is the market fearful?

Tariffs will disrupt trading, could push us into a recession in their proposed form, and likely will flare up inflation in the short run. This combination could get us into a dangerous scenario of stagflation.

Markets also hate uncertainty. While the expectation is trade disruption at the very least, markets are uncertain about what's really going to happen with the policy.

-What does it mean for crypto?

There's no tariff on crypto, but in the short run, crypto will very likely react if stocks are tanking.

The good news is crypto only reacts short term to stocks, macros, and news. The nice thing about its higher and faster volatility and bad news blows over much more quickly, even if the bad events are still in effect.

We've seen it with Covid, the war in Ukraine, global financial crisis, recession, fed rate hikes, inflation, quantitative tightening, etc… Even recently with how quickly Bybit became old news in a matter of days, despite people saying it would be an FTX 2.0.

– How low will it go?

Considering that we've known about tariffs for many weeks now, and the market has been dropping each time, it's likely that a portion of it is already priced in. So people betting on the downside have to be careful not to overestimate a drop. It's not the guaranteed play they think it is.

At the same time, the market could worry about much longer and much more negative effects than it had anticipated. Especially if we see even more escalation. That could potentially cause a brutal downward spiral, where we see Bitcoin hit a series of new lows below $75K. It may even cause a premature start to a bear cycle.

But one thing that may not be present anymore is uncertainty. And even if the tariffs don't get scaled back, the mere factor of having uncertainty lifted could get markets pumping instead of dumping.

So the worst case scenario is maybe at a 30% probability at best. And an inverse scenario of markets pumping instead of dumping may actually be just as high in probability. With the highest likelihood be the in-between scenario.