If the Bitcoin halving cycle is used as a time anchor ⚓️, the Fed’s interest rate cut cycle should have occurred in Q4 of 23 years.
But the Biden administration at the time distorted the non-farm data by liberalizing employment for illegal immigrants and expanding the size of government employees, and resisted the interest rate cut. However, because the U.S. Treasury needed to issue a large amount of U.S. bonds to raise funds to pay for Biden's Keynesian policies, the 10-year U.S. Treasury yield (real market interest rate) had a steep downward slope, creating a seasonal bull market spanning Q4 of 23 and Q1 of 24.
Entering Q2 of 2024, with the Ministry of Finance slowing down its bond issuance speed and the outbreak of global non-US systemic risks (Tohoku real estate market + Japanese bond market), there is a strong demand for risk aversion, and the US dollar, US bonds and gold have become in-demand commodities. Coupled with the historical tradition of no market in the risk market in Q2, the entire crypto market has entered a period of depression.
In Q3 of 2024, in order to save Biden/Harris's election, the Federal Reserve started the process of interest rate cuts, but the 10-year US Treasury yield rose strongly in the opposite direction, resulting in a strange phenomenon of lowering nominal interest rates while real interest rates approaching a record high. Therefore, the market in Q4 of 2024 was not driven by external hot money, but by the "Trump transaction" superimposed on the autumn restlessness. In fact, it also started from Trump's election as the US president and ended from Trump's issuance of the same-name Meme coin to drain the on-chain liquidity.
When the time evolved to Q1 of 25, the main contradiction in the market was no longer the contradiction between non-farm payrolls and CPI data and the Fed's forecast management, but the contradiction between the White House, the Department of Government Efficiency and the Fed. The impact of this contradiction was so severe, coupled with DeepSeek's puncture of the US AI hegemony, even US bonds suffered a wave of rapid selling. The decline in real interest rates caused by panic did not help the spring market, but instead prompted a large amount of capital outflow.
Today we are facing a basic fact that the United States has entered a state of major changes unseen in a century. If Musk's reform, which is supported by Trump, succeeds, it will extend the life of the United States, a world empire, for another 100 years. If it fails, I dare not imagine what will happen.
Faced with such huge systemic risks and uncertainty about the US crypto regulatory framework in July, major players in the crypto market, who are in a prisoner's dilemma, choose to take the initiative and drain liquidity first.
The logic behind Binance's reversal and its own meme is the same, the logic behind OKX's launching PI in defiance of the world's concerns is the same, and the logic behind a large number of top-tier projects in the primary market bleeding through TGE is the same.
The weather is stormy and dark, which is not good for adults. You should conserve your capital.
