Article Source: Words Beyond Words
According to the research report by The Kobeissi Letter, the long-term inflation expectation in the United States has soared to 4.1%, reaching its highest level since 1993. Trump's tariff policy is considered the main cause of this issue, as there has been a trade deficit of over $300 billion in just over two months, which severely affects consumer confidence. In addition to the long-term inflation expectation, the 1-year inflation expectation has also surged from 2.6% to 5.0%, nearly doubling in less than three months, which will inevitably have a negative impact on the investment market, as shown in the following image.
In this macroeconomic environment, the decline of US stocks is understandable, and the crypto market will experience an even larger drop, while gold continues to rise and break historical highs. It seems that smart big money is making choices through practical actions. In just over two months, the inflow of gold ETFs has reached $12 billion. As shown in the following image, the S&P 500 has dropped nearly 5% this year, while gold prices have risen nearly 17%, revealing an atmosphere of economic slowdown.
Let's return to the crypto market.
BTC, which has been touted as digital gold in recent years, seems to have not demonstrated gold-like attributes. BTC's price has dropped 30% this year, causing many people to be bearish on the crypto market and believing there is no hope left.
However, looking at BTC's current situation, it appears to be better than any historical period, as it has transformed from a so-called tulip bubble to a national strategic reserve asset in the US. More and more large institutions are beginning to adopt BTC, indicating that BTC's image is slowly undergoing qualitative changes.
In the medium and short term, BTC cannot become true gold (digital gold attribute) and cannot serve as a mature hedging tool for big money compared to gold. Its price is still subject to huge fluctuations caused by speculative factors, making current BTC look more like a tech stock. However, in the long term, we believe BTC will eventually become a global asset and exist as an effective financial instrument on various balance sheets, which seems to be just a matter of time.
But for this cycle, although theoretically, a new bull market seems to have started in 2023 (2023-2025), if we look at some indicator experiences, we have not yet experienced the so-called theoretical big bull market (or crazy bull market), as shown in the following image.
There might be two possibilities:
One is that the crypto market no longer follows historical cycle indicators and rules.
Two is that the crypto market has not yet truly ushered in the theoretical big bull market.
Which of these two situations do you personally lean towards?
We do not provide a specific answer here, as this question has no standard answer. Different people may have different perspectives.
In recent articles by Words Beyond Words, we have mentioned Trump quite frequently because his every move directly impacts market trends. For example:
Last year, Trump's friendly crypto promises led to BTC breaking the $100,000 historical mark, while this year, his tariff policies have caused continuous BTC pullbacks. The US BTC strategic reserve, which was highly anticipated, has merely become an asset composed of confiscated funds.
On one hand, Trump's policies after taking office have caused the market to plummet, and on the other hand, the WLFI (World Liberty Financial, Trump family project) investment portfolio continues to accumulate crypto assets (including ETH), and they recently announced the launch of a new USD stablecoin USD1, creating a rather strange and interesting phenomenon.
In the current overall market environment, the crypto market's catalyst seems to rely more on external environmental factors (given insufficient internal innovation). If the market wants to rise again, it mainly hopes for three points:
One, Trump's tariff policies end within a few months.
Two, the Federal Reserve adopts a new quantitative easing (QE) policy to stimulate the market (providing more liquidity conditions, causing some liquidity to overflow into the crypto market).
Three, global net liquidity continues to increase (although the US dollar remains king, net liquidity increases from the EU, China, and Japan will also somewhat promote price increases of high-risk assets like BTC).
However, these big points currently do not seem very clear, and the market may need more time to wait and digest.
Let's make a single-angle assumption here (note this is just an assumption). If we look at the Global M2 indicator from a macro perspective, this indicator has existed with a BTC trend lag of about 70 days. For example, Global M2 reaches a stage peak of $108 trillion on September 23, 2024, and BTC reaches a stage peak of $108,000 on December 17, 2024.
Therefore, theoretically: If Global M2 reaches a stage peak of $109 trillion on March 24, 2025, then without new major black swan events, BTC might rebound to a stage high point in June 2025 (just a stage high point, not necessarily breaking the historical high).
Of course, you can directly reject this assumption. Since it is an assumption, it may be right or wrong. There is no need to continue arguing. We are merely providing a possible perspective and not offering any investment guidance.
Currently, there are many opinions and voices online. I have also occasionally been paying attention to the remarks and sentiments of KOLs on CT (Crypto Twitter), and found that:
Most KOLs seem to be bearish and claim to have precisely exited at the top, which I admire.
Some KOLs believe the big bull market hasn't started, and $100,000 BTC is merely a new starting point, with BTC price potentially breaking new highs and reaching $150,000 by year-end.
Some also believe a new round of price increases might occur in the second quarter of this year... and so on.
However, everyone's thoughts or views differ, and the corresponding strategies will vary. What others say or do is not important; what matters is what you will do and whether you have different coping strategies.
Personally, although I sold 10% of my BTC in December last year, I am still in an actively HODLing state and am "enjoying" profit pullbacks again. Fortunately, I have experienced this many times, and the current market sentiment has not brought me any new anxiety.
Because funds are always flowing, financial markets will never lack hot spots. I've noticed that many people seem to have recently returned to studying gold, US stocks, and Hong Kong stocks. I have not participated in these, not only because I don't have that much time and energy, but also because I choose to remain focused in the crypto field and continue to hone myself.
This morning, I happened to see a piece of text shared by a partner in the group, which also resonates with my current state of mind:
Tomorrow (April 2nd) is a special day that Trump has been hinting at recently. The president may announce reciprocal tariffs averaging over 15% on imported products from about 25 countries. Additionally, some important economic data will be released by the United States this week, and we may continue to see significant market volatility. If you don't know what to do at this time, the best approach is to do nothing.
Due to Trump's potential reciprocal tariff measures, Goldman Sachs has significantly raised the U.S. inflation expectations and lowered GDP growth forecasts. At the same time, Goldman Sachs predicts that the Federal Reserve will cut rates three consecutive times in 2025 (in July, September, and November), ultimately maintaining the federal funds rate forecast at 3.50–3.75%.
Although some institutions like Goldman Sachs have issued new expectation reports, the high inflation expectations and rate cut expectations undoubtedly add more new uncertainties to the market.
Let's look at another piece of data: so far, the average U.S. tariff rate has reached around 8%, which is the highest level since 1970. If the U.S. trade war escalates this week, we may see a new round of retaliatory policies from some countries, which could even evolve into a large-scale global trade war. In other words, this month (April), we might witness the U.S. average tariff rate breaking the 1946 record, as shown in the following image.
As for Trump, who likes to stir things up, it seems that a trade war is not enough. He recently has been engaging in other provocative actions, such as publicly stating yesterday (March 30th) that Iran would be bombed if they do not reach an agreement with the U.S., as shown in the following image.
Trade wars + military threats seem to be Trump's current specialty, and the impact of these events is not limited to the crypto market and stock market but will also affect the global economy and situation to some extent.
Today (April 1st) is April Fools' Day, and tomorrow is the "Liberation Day" in Trump's words (April 2nd, dubbed Liberation Day by the U.S. president). Will April bring a new beginning for the market, or a new end?
Let time tell us the answer.
As ordinary investors, we seem unable to change the big picture. The only thing we can change is our own position (protect our position and patiently wait for new money-making opportunities).
Article source: https://mp.weixin.qq.com/s/r4Vcs5iRcUK5adluiXCxHw
