Editor | Wu Blockchain about Blockchain
Wu Blockchain Colin and Jiang Jinze, chairman of MuseLabs and former chief researcher of Binance Research Institute in China, discussed the trend of cryptocurrency after Trump took office, including whether the US national Bitcoin reserve can be realized; Trump may veto the negative policy of "banks going cryptocurrency"; the benefits and risks at the macro level; how to view the Trump family's issuance of a large number of meme coins and cryptocurrency projects. Jiang Jinze personally believes that this year's overall benefits outweigh the negatives, and Bitcoin may move towards 150,000 to 200,000 US dollars.
The audio transcript was generated by GPT, so there may be some errors. Please listen to the full podcast:
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Trump's implementation of Bitcoin strategic reserve will boost confidence
Colin: Hello, listeners. Today we invite our old friend Jin Ze from the podcast to talk about some recent macro trends, especially the possible directions after Trump takes office in the United States.
Jin Ze also recently wrote an article about the possible development prospects of Bitcoin reserves. Our official account also reposted it. You can follow Jin Ze's Twitter to read his subsequent analysis, which I think is still very valuable. Today, I think a question that everyone may be very concerned about is how the price of Bitcoin will trend after Trump takes office.
I personally think this trend may be affected by two factors:
First, macroeconomic policies. Many people would say that Bitcoin is three times more leveraged than Nasdaq, and it is closely related to the liquidity of the U.S. dollar.
Second, is it possible for the United States to directly incorporate the bitcoins currently confiscated from criminals into its national reserves? This is the simplest way.
Even if other complex measures are not implemented, this step alone will have a strong boost to Bitcoin and may also lead other countries to follow suit. I wonder what you think of the Bitcoin market trend in the next six months to a year? Is it mainly affected by macroeconomic policies and Bitcoin strategic reserves?
Jinze: Regarding strategic reserves, my view is that if the currently confiscated Bitcoins can be transferred to the national reserves, a special department can be established to manage them, and a commitment is made that they will not be sold for at least ten years, such a move will significantly boost market confidence. This boost in confidence can be seen as a strong market signal.
But confidence boost and real buying are two different things. For example, when BlackRock and Vanguard announced the possibility of launching a Bitcoin ETF, the market price surged to more than 70,000 in a short period of time as the probability of increase came out, and then fell rapidly. If there is only confidence boost but no incremental buying, the market is still a stock game. At present, the scale of stablecoins in the market is limited, and the number of players is also fixed, so there is room for imagination, but it is not infinite.
More importantly, the US government is now in financial difficulties and faces the problem of debt ceiling every year. There are even rumors that elderly benefits may be cut this year. It is difficult to shift from stock game to incremental game just by transferring reserves without adding new funds to purchase incremental Bitcoin. In this context, even if the United States promotes such strategic reserves, it is likely to be a short-term "roller coaster" market.
As for foreign imitation, the public awareness level and the openness of the ruling system in most countries are lower than that of the United States, so the possibility of large-scale imitation is low. Only a few countries such as El Salvador and Bhutan may try it.
Funding Challenges of Trump’s Bitcoin Reserve Plan
Jin Ze: In addition, the more important question is "where does the money come from?" If this strategy is made clear, the market will rush ahead. If the US government releases a plan and starts market purchases, it is likely to fall into the "last fool to unveil" game, and the market price will be quickly raised, and the cost of paying the bill will be extremely high. In the current US fiscal situation, it is almost impossible to issue additional bonds, because the government's funding needs have been overwhelmed by welfare, health care, military spending and debt interest.
Congress controls the budget, so even if Trump sets up a Bitcoin reserve management agency, it is difficult for him to actually spend money to buy Bitcoin. Without the support of incremental funds, simply transferring existing Bitcoin may not have a lasting market impact.
Trump did not mention Bitcoin or other cryptocurrencies in several speeches on his first day in office, indicating that supporting the crypto after his election is not a priority. His priorities may be more focused on people's livelihood issues or solving the fiscal crisis. In this situation, promoting Bitcoin reserves may not be a policy focus that can be expected in the near future.
There is no doubt that the US government's debt-raising capacity is very strong. Historically, the United States did buy gold by borrowing money (especially after gold was decoupled from the US dollar). However, the current fiscal situation is very bad. If the current trend continues, the market expects that in about ten years, the US annual interest expenditure alone may account for 40% of fiscal revenue. In this case, the US government's finances will have almost no room for maneuver, which also means that the risk of "bankruptcy" is extremely high.
If this government fails to carry out drastic fiscal reforms, the fiscal continuity of the United States will be very fragile, and it can even be said that the probability of bankruptcy within ten years is "very high." This prediction is not groundless, because the speed of debt expansion, interest costs, government spending growth, and GDP growth rate of the United States can all be quantified.
Nevertheless, if the US government really wants to borrow money, such as issuing an additional $50 billion to $100 billion in debt to buy Bitcoin, it will be an astronomical figure for the Bitcoin market. However, this possibility is very low; but if it really happens, the market space it brings will be extremely huge. In addition, if Trump is willing to promote this policy in the early stage, he may be able to use the stabilization fund of foreign exchange reserves. This method does not require congressional approval and is a possible path.
According to the analysis of legal experts I have seen, it should be feasible to use the Exchange Stabilization Fund. The fund is about $200 billion. Although it is impossible to invest all of it, it is possible to divert part of it. In contrast, actions at the federal level may face greater resistance, while exploration at the state level seems more feasible. In fact, at least five states have proposed similar bills and entered the review process. These states include New Jersey, Texas, Florida, and North Dakota.
These states can implement this relatively easily through small-scale pilots, such as setting up Bitcoin reserves, allocating small amounts of funds, or even allowing public pension funds to participate in the investment. Although the scale of such pilots will not be large, their symbolic significance and practical experience may pave the way for larger-scale policies.
Trump's coin issuance and Freddie Mac model: innovative paths for US Bitcoin reserves
Jin Ze: Regarding the Trump Organization's "coin issuance", this is a very interesting case. Trump has currently issued at least three token projects. Although these operations seem "outrageous", they are also a kind of exploration. He can raise funds from the cryptocurrency market for Bitcoin reserves by setting up a blockchain-based financing project. This financing method may seem too direct, but its feasibility is not low. For example, like some well-known projects, directly raise funds from the market, and then use the raised Bitcoin or Ethereum for financial management or lending.
The biggest advantage of these projects is that they do not need to announce any reserve plans in advance, nor do they need to declare their purpose in a high-profile manner. Instead, they quietly raise funds in the market and then complete subsequent reserves. This approach reduces market risks and avoids some legal obstacles at the policy level.
If viewed from the perspective of a traditional company, this model is actually similar to MicroStrategy's approach. MicroStrategy holds a large amount of Bitcoin assets, but does not directly distribute dividends to shareholders, and only returns the underlying assets when liquidated. However, for investors holding MSTR shares, this model presents certain risks. Holders may not be able to cash out these assets during their lifetime, even though MSTR shares have very high liquidity and return on investment.
I think the federal government can learn from MicroStrategy's approach and set up a similar company to raise funds through market-based means to establish the U.S. National Bitcoin Reserve. This approach not only has historical cases (such as the Freddie Mac model), but also can balance government intentions and market demand.
The Freddie Mac model is actually a classic case. Freddie Mac was originally a market-oriented institution, but later due to the financial crisis, it was injected with large amounts of capital and gradually transformed into a semi-governmental institution. Its main task is not only to make profits, but also to bear a lot of responsibility for macroeconomic regulation. If we use a similar model to build a Bitcoin reserve, the key is whether Bitcoin can have a sufficient systemic impact on the financial system like real estate did back then.
Loosening of corporate and banking policies: Crypto market ushers in new liquidity opportunities
Jinze: But at present, the great uncertainty of the source of funds makes the actual implementation of the Bitcoin reserve plan difficult. On the contrary, I think that we can expect Trump to lift the strict restrictions on cryptocurrencies during the Biden administration through executive orders, which may bring more direct and realistic benefits.
Recently, a related accounting rule has been lifted, allowing companies to treat Bitcoin as a tangible asset and value it normally. This rule change is significant because in the past, when companies held digital currencies, if the value of the assets decreased, they had to write them down, but if the value increased, they could not record them on the books. Such restrictions made many companies reluctant to publicly hold Bitcoin.
As these rules are gradually relaxed, we can expect more businesses, especially cash-rich companies, to be willing to enter the cryptocurrency market. These changes, combined with the possibility of loosening banking restrictions, will inject huge liquidity into the crypto market.
Banks accepting Bitcoin as collateral on their balance sheets could be a huge driver of the market. Imagine that when bank liquidity can be released through Bitcoin collateral, the leverage capacity of the cryptocurrency market will be greatly improved. Although this model cannot completely replicate the subprime mortgage crisis, its potential impact is enough to drive a new round of bull market or even asset bubbles.
This trend may bring about very large market fluctuations in the short term, or even a sustained upward trend. For those who pay attention to this field, this is a major policy change that needs to be closely tracked.
Colin: Yes, this should be a relatively high probability. Because the core news today is the Reuters report, saying that the boss of Circle mentioned that one of the first 200 executive orders was to end the policy on restrictions on bank cryptocurrency. In fact, this is the possibility you just mentioned, and it is indeed a beginning.
Jinze: That’s right. And yesterday at Trump’s coronation ceremony, many people were expecting news about Bitcoin reserves. Sometimes there was news, sometimes there wasn’t, and the price of Bitcoin fluctuated greatly. This expectation is actually a bit funny, because from a realistic point of view, it is unlikely to be realized. In comparison, I think it is more pragmatic to pay attention to the timing of the bank’s lifting of the ban.
Today I also noticed that Bank of America seems to have started to talk about this, so this policy should be implemented soon. If it really comes true, it will be a real benefit to the liquidity of the cryptocurrency industry. The current market price fluctuations are somewhat bizarre. For example, the price of Bitcoin once fell below $100,000 yesterday. I think in this context, there is not much reason for such a decline, because the real benefits - especially the benefits in terms of liquidity - have not actually been fully released.
Colin: Yes, I think you have explained it in great detail. Especially the issue of lifting the bank ban, many people actually do not pay enough attention to its significance. But after listening to your analysis and thinking carefully, I do realize that this may be a very important node. After all, many elites in the United States, whether Trump's think tank or donors who support him, must have made these suggestions after careful consideration, and they are what they think is the most important and currently feasible. It is indeed of great strategic significance.
Bitcoin market outlook in 2025: multiple benefits and potential risks
Colin: Yes, I want to talk about another issue, which is the two lines mentioned just now: the trend of Bitcoin this year may be driven by Trump's favorable policies on the one hand, and may also be affected by the macro economy on the other hand. For example, the market is now paying attention to whether the interest rate cut will stop in the first half of the year, and the impact of the debt ceiling issue on the economy and the market.
Jinze: I think this year may be a very good year for those who do swing trading. Although I personally don't do swing trading, I can expect that the market will fluctuate greatly this year. The reason is that there will be many positive and negative events this year, which will cause significant market fluctuations.
First, let's look at some major positives, such as the progress of AI technology. Many institutions' outlooks show that AI is the most important or even the only important investment theme this year. Last year and the year before, AI hype was mainly concentrated in the hardware field, especially last year, when Nvidia's stock price rose rapidly in the first half of the year and there was almost no change in the second half of the year, and AMD's stock price fell 40% from its high. After the story in the hardware field is gradually told, the market is in urgent need of finding new hype points for AI.
In the middle of last year, many institutions began to spread the rumor that AI's financial contribution might be limited. For software vendors, the profit growth brought by AI might be negative, because they are in the investment stage, and the annual investment in R&D and data center construction is as high as hundreds of billions of dollars. Therefore, from the second half of last year to the autumn, AI-related stock prices experienced a significant correction, which was called "AI falsification."
However, the market trend changed again. More and more companies began to report the positive impact of AI on productivity and revenue. For example, Palantir (enterprise application software company) and AppLovin (smart advertising company) became star companies in the AI field last year, and their growth even exceeded many Altcoin. When the market discovered the actual performance growth potential of AI, these companies were hyped up. Recently, more and more companies, such as Walmart, Salesforce and SAP, are reporting the contribution of AI technology to their efficiency improvements. These signs indicate that new investment opportunities will continue to emerge in the AI sector this year.
Coupled with the policy environment of deregulation, this year's macroeconomic background may be rare in history. For example, the Trump administration's policies, the outbreak of AI, and the promotion of the interest rate cut cycle have made this year's market environment very favorable. If there are not too many unexpected events, such as war, the new crown epidemic, financial crisis or government shutdown, this year may even usher in a bigger bull market.
Historically, the United States has experienced several periods of massive tax cuts, deregulation, and technology explosions, such as the wave of growth around 1920 and before the Internet bubble in 1990. 2025 may have similar potential, as long as the capabilities of AI can be fully tapped. Of course, there are also some things that may cause market risks this year, such as:
1. The instability of Trump’s regime: His cabinet selections are controversial, such as the Secretary of Defense and the head of the FBI. Questions about these selections from within and outside the party may lead to a decline in Trump’s ability to govern.
2. Potentially large tariff increases: Although Trump promised to increase tariffs on Mexico, Canada, and China on his first day in office, he actually said he needed to investigate for more than three months first. This phased tariff increase could have a negative impact on the economy. Imposing tariffs on China is actually equivalent to raising taxes on American consumers, which will push up inflation and further drag down the economy.
3. Risk of government spending cuts: The Trump administration plans to lay off a large number of federal employees and cut pensions, health insurance subsidies, etc., but these measures may lead to social unrest and have a negative impact on GDP growth.
4. International risks: For example, Japan's interest rate hike may lead to capital inflow back to Japan, thus triggering a global credit contraction. In addition, external factors such as the rise of far-right forces in Europe may have a smaller impact, but they cannot be ignored.
In general, this year will have both positive and negative effects. Whether the market will rise ultimately depends on the improvement of production efficiency and whether companies can create more value. Judging from the earnings growth forecast of S&P 500 companies, this year is expected to be between 10% and 13%. This kind of forecast is often more accurate. As long as there are no extreme events, such as war, epidemic or financial crisis, the 10% increase target for US stocks this year is not exaggerated.
In addition, the US dollar yield has recently risen from 3.7% to 4.7% in a short period of time, and then began to fall back. This decline may indicate the end of the strong cycle of the US dollar. A weak dollar is good news for both the stock market and the Bitcoin market. This is also worth paying close attention to. In general, I think the outlook for the macro capital market this year is optimistic.
Bitcoin ETF capital inflow threshold and price growth expectations
Colin: I think your point of view is quite clear, that is, the macroeconomic conditions this year are generally favorable, but there may be some risk points. According to this logic, the general market estimate is that the lowest price of Bitcoin is around $150,000. Assuming that, as you said, the US stock market rises by 10% this year, then as a leveraged US stock asset, the forecast of $150,000 for Bitcoin seems to be a reasonable range, right?
Jin Ze: Not entirely true. Before the ETF was listed, I wrote an article in which I mentioned that the capital inflow after the ETF was listed would experience a threshold, and the first hurdle was about 50 billion US dollars. After reaching 50 billion US dollars, the speed of capital inflow may slow down and enter the range of 50-70 billion. This is indeed in line with the current situation.
Why do I say that? Because we can use the stock market as a reference. Wealthy institutions or high-net-worth investors, especially those clients we often contact, attach great importance to the cash flow of assets. If an asset has no cash flow, most high-net-worth institutions and individuals will not be willing to allocate it. For example, the holding scale of crude oil ETF is actually very small. Although crude oil is the "king of commodities", its appeal is limited because of the lack of cash flow and high storage and friction costs.
Based on this logic, we can compare the scale of gold spot ETFs. At present, the scale of the largest gold ETF in the United States is about 50 billion to 70 billion US dollars (this number has increased after the subsequent increase in gold prices). The current market situation of Bitcoin is about 1.2 million Bitcoins, and at $100,000 per coin, the total value is about 120 billion US dollars. This is close to the total market value of all spot gold ETFs in the United States (about 130 billion to 140 billion US dollars).
Currently, the price of Bitcoin has broken through the important resistance level of $100,000 to $110,000. If this range is broken, it means that the market preference is tilting from gold to Bitcoin. This "preference flip" is a milestone event.
This key point of $100,000 may experience a long period of volatility, and you have also seen the price hovering in this range many times. If it finally breaks through, it will push Bitcoin to a new level, and its market value will exceed the current size of such "non-interest-bearing and almost no practical use" assets. But if Bitcoin can prove that its growth exceeds that of gold, then its appeal will be further enhanced.
Once the $100,000 to $110,000 range is broken, the next target may be the total size of global gold ETFs. The doubled market value of US gold ETFs is about $270 billion, which is the next node worth watching. We can dynamically observe the realization of this goal.
As for whether Bitcoin can break through the current scale of about $130 billion, it depends on whether there are new favorable policies. For example, if the regulatory policies of some countries are relaxed or sovereign wealth funds begin to increase their holdings of Bitcoin, these will inject new liquidity into the market. If these conditions are met, the scale of Bitcoin ETF may reach about $270 billion.
As for the corresponding price level, since the number of bitcoins in the ETF may increase, the price growth may not double completely, and may hover between $150,000 and $200,000. But if Bitcoin really reaches this scale, its penetration into the financial system will reach an unprecedented depth. In this case, we cannot simply expect it to continue to rise indefinitely, but we need real capital inflows to support it, otherwise the market pressure will be very great.
Trump family issues currency: a clever market experiment
Colin: I see you have also been paying attention to Trump’s recent release of Memecoin and his family’s crazy moves. What do you think of this?
In fact, I noticed that there are different opinions from the outside world. Some people think that this may show that he has no faith in cryptocurrencies, especially Bitcoin, and may just want to make a fortune. Some people also believe that this at least shows that he supports or embraces cryptocurrencies, and even other projects can follow his example. What do you think?
Jin Ze: I think it's good, and Trump's operation method can even be said to be quite clever, rather than the kind of random release method. He did not announce it in advance this time, but released it suddenly, which is fairer. If the government had announced it in advance, ordinary people would have had little chance to participate. Without an announcement, although there are still technology and information gaps, overall, this model minimizes the advantage of information gaps.
In addition, the funds raised by the tokens he issued (such as WLFI) did not sit idle, but were invested in a basket of digital currency assets. I also saw that he even used these assets to pledge Ethereum and earned interest. This is a very positive sign, which may mean that he is testing a "sandbox model" to explore how to establish Bitcoin reserves through private fundraising through his own company or protocol. Even if it is not a national reserve, it is completely feasible to do a project similar to MicroStrategy (MSTR). Judging from Trump's appeal, it is not difficult for him to do another project of the scale of MSTR. It just depends on whether he has the energy and willingness to do it.
Through such attempts, I think it is very likely that Trump will eventually follow the path of MSTR, and even reach a similar scale. Of course, MSTR has an obvious flaw. It only invests in Bitcoin, and Bitcoin itself does not generate interest (cannot generate interest). In contrast, Trump can choose to do a package of asset management solutions through the WLFI token project. For example, design a token similar to MSTR that will never be liquidated, although this token cannot even be transferred now, while MSTR shares can be bought and sold freely. This package management model is more attractive than holding Bitcoin alone.
At present, I think his strategy is successful. As for his vision, I personally think it is obviously not as big as many experts on the Internet imagine. Some people suggest that he airdrop the tokens to supporters, or more radically, to people all over the world, which can greatly increase the market value of the tokens. But I don’t think Trump may have such a vision, although this approach is also a good way. Of course, this does not rule out the possibility in the future. After all, there are rumors that Sun Ge is the manipulator behind this project. Although this statement cannot be fully confirmed, it cannot be completely ruled out.
Colin: Not really. I know a little bit about it. Sun is not a trader. If you look at the projects he has managed in the past, they are all pretty bleak. The real trader is actually Polychain. This is almost semi-public or even completely public information.
Whether it is the project you mentioned, WLFI, or Memecoin, you can actually see the participation of many American institutions behind it. The United States itself is a very small circle, and these people are also sticking together. For example, in the two Memecoin projects, Wintermute has been operating and controlling everything behind the scenes. But overall, Polychain has a very large influence. For example, they previously hired some Chinese as project consultants, and these consultants themselves are either the project leaders invested by Polychain, or people who are very familiar with Polychain.
Kanazawa: I haven’t studied this, but it sounds very interesting.
Colin: Yes, I think your analysis of this project makes sense, especially your mention of the possibility that this project may be listed in the future. This is indeed a novel perspective that I have never thought of before.
Jin Ze: He may not directly use the current project to go public, but he can use this project to conduct some exploration and then re-create a listed company. Theoretically, this is a completely feasible path.
Colin: But isn’t it a bit too complicated for him? He may not need to set up a listed company, and can directly raise funds by issuing coins: selling “air” in exchange for US dollars.
Kanazawa: Yes, but this approach will gradually erode his credibility and market influence.
Colin: Yes, but he has already issued a lot of tokens, and maybe all that can be issued has been issued.
Jinze: That's right, especially now that he has officially taken office, it is obviously unlikely that he will personally do these things. Because if he continues to operate these projects during his term, it will be easy for opponents to catch him, and it may even lead to impeachment. So these explorations need to be completed before he takes office.
However, I think he has actually found a way - to create a project similar to MSTR, but more cutting-edge and innovative than MSTR. This approach is worth trying. By establishing a Bitcoin reserve for the United States in the form of a company, this reserve does not necessarily have to be held in the name of a federal agency. As long as the company is controlled by the United States and can obey the will of the government and stabilize the market through reserves, that is enough. In fact, this is very similar to the model of Freddie Mac.
