Hey Edge readers,
Trump’s tariff talk is back in the headlines, and so is market volatility. Investors are bracing for what this could mean across risk assets, from equities to crypto. BTC dropped, ETH followed, and timelines filled up with anxiety. It’s moments like these that test your conviction. In uncertain markets, your worst enemy is often your own emotions. Chasing reversal pumps or panic-selling during dumps is how long-term plans get derailed. But the smart money doesn’t panic. They have a plan—and they stick to it.
Stay sharp. 🫡
- The Exponential team
Markets shake, but your strategy shouldn’t
Markets have been reeling in the wake of President Trump’s newly implemented trade policies. The long-anticipated tariff package, officially announced on April 2, delivered harsher terms than expected—imposing a baseline 10% tariff on all imports, with significantly steeper penalties for trade partners like China, Germany, and Mexico. Investors responded swiftly. The S&P 500 saw its sharpest weekly decline since the COVID era, while tech and small-cap stocks entered bear territory.
This is not the time to panic
Just as in traditional markets, the worst outcomes in DeFi often stem from emotional decision-making. Selling out of long-term positions after a sharp drawdown tends to lock in losses, not avoid them.
The key is to maintain perspective. Tariffs create short-term dislocation. They may increase input costs, pressure margins, and slow growth, but the market has already priced in a good deal of this risk. What matters most now is how companies, consumers, and markets respond over the coming weeks and months.
This holds true for DeFi as well. While the broader macro backdrop affects risk appetite, fundamentals still matter. Protocols continue to generate yield. On-chain liquidity remains healthy. And the best investors will look through the noise and stay focused on the long term.
Strategies to weather the storm
We believe this is an environment where thoughtful positioning and risk-managed yield strategies are critical. Here are a few ways DeFi investors can navigate the current volatility:
- Sit in stablecoins for yield and stability: Deploying capital into high-quality stablecoin pools is a reliable way to earn while waiting out volatility. These strategies typically yield 4–8% APY depending on risk profile and protocol incentives, with minimal directional risk and easy access to liquidity when it’s time to redeploy.
- Market-making with long-term conviction assets: Providing liquidity in BTC-USD, ETH-USD, or SOL-USD pairs can be a smart way to earn yield while sticking to a plan. By setting wider price ranges aligned with your buy and sell targets, you can passively scale into or out of positions over time. These strategies can deliver 8–20%+ APYs, depending on trading volume and incentive programs, but they do involve impermanent loss risk, so they’re best suited for assets you plan to hold over the long term.
- Stick to your plan: If you’re dollar-cost averaging into crypto blue chips or building long-term positions in DeFi protocols, now is not the time to abandon your strategy. History shows that panic selling during drawdowns rarely pays off and often comes just before the rebound.
- Avoid reactionary trades: Trying to time the market on the heels of major policy announcements is a losing game. Let the dust settle. Reacting based on headlines, not fundamentals, is a surefire way to miss the forest for the trees.
Stay the course
It’s clear that the tariff regime will have meaningful short-term effects on both traditional and crypto markets. But we’ve seen this movie before. Geopolitical shocks, regulatory changes, and macro disruptions are part of the investing landscape. In each case, disciplined investors who stuck to their thesis emerged stronger.
Crypto is no different. Amid the noise, yield opportunities remain. DeFi continues to evolve. And those who stay the course now will be best positioned to benefit when sentiment shifts.
In the news 🗞️
- Bitcoin steady at $82K as inflation cools and dollar weakens. BTC held firm above $82,000 after U.S. Producer Price Index (PPI) data undershot expectations, reinforcing the trend of slowing inflation. Meanwhile, the U.S. dollar index (DXY) fell below 100 for the first time since 2022, historically a bullish signal for Bitcoin. Despite these macro tailwinds, traditional risk assets like the S&P 500 failed to rally, suggesting broader market uncertainty still looms around trade tariffs.
- Aave hits record deposits as DeFi weathers the storm. Despite a broader market sell-off sparked by tariff fears, Aave saw deposits climb to an all-time high in ETH terms of ~11M ETH ($17.3B). Other protocols like Sky (formerly MakerDAO) and Spark also posted multi-million inflows, while DEX volumes surged past $11B. The trend suggests DeFi may be emerging as a safe haven during periods of heightened volatility.
- Babylon unveils Bitcoin-secured L1 to power BTCFi. Babylon Genesis will launch as the first Bitcoin-secured Layer 1 chain, combining Bitcoin staking, Cosmos infrastructure, and a native BTC liquidity hub. Built with dual-quorum security and hourly BTC timestamping, Genesis aims to transform BTC from a passive asset into the backbone of PoS security and DeFi. With plans for DEXs, restaking, and trust-minimized BTC bridges, Genesis could become the foundation for a new wave of Bitcoin-native applications.