The potential market breakdown caused by President Trump's announcement

The major policy announcement from the White House at 8 p.m. ET is not just routine news. Especially if it involves the appointment of a new Federal Reserve Board Chair, it can immediately cause a breakdown in global financial markets. This macro-level event can instantly impact the U.S. stock market, the dollar index (DXY), cryptocurrencies including Bitcoin, as well as gold and bond markets.

Why the appointment of the Federal Reserve Chair can shake financial markets

The appointment of the Fed Chair is not just a personnel change; it determines the direction of the entire financial system. The new chair’s economic philosophy will significantly influence future interest rate policies, liquidity supply, and money supply. If a hawkish approach is adopted, markets may face selling pressure on risk assets. Conversely, if a dovish stance prevails, liquidity can surge rapidly, leading to accelerated inflows into risk assets including cryptocurrencies. This mechanism creates extreme uncertainty among market participants.

Market volatility and investor responses during macro events

Rapid market fluctuations do not affect all investors equally. Large institutional investors and hedge funds often adjust their positions before the announcement and are prepared to act quickly. Retail investors, on the other hand, tend to react after the market movement has already started. This time lag can have serious consequences. Stop-loss orders may be deliberately targeted, bid-ask spreads can widen suddenly, and liquidity can dry up. During a breakdown, these chain reactions occur in a very short time, leaving little room for investor judgment.

Risk management strategies during breakdown phases

In periods of high market volatility, risk management becomes paramount. With a single announcement capable of instantly changing market direction, investors must take clear actions. Managing position sizes appropriately, setting stop-loss levels in advance to limit losses, and regularly reviewing asset allocations are essential. Especially in a breakdown environment, price movements can outpace normal speeds, so maintaining composure and avoiding emotional decisions are key to success. Recording time and closely monitoring market movements during events, while staying within your risk tolerance, is a wise approach.