Author: Metrics Ventures
Market Observation Guide for Cryptocurrency Secondary Fund Metrics Ventures (July-August):
1/ This was originally the title for July, but Warsh's remarks in July were far too significant, so we have appropriately extended the timeframe for our monthly analysis. As expected, the title remains relevant. As of the date of this monthly report, the bond market has already priced in Warsh's incompetence with a rapidly steepening yield curve. The problems with the US dollar are no longer something a Fed Chair can change or solve. The interim process will inevitably involve repeated disturbances.
2/ From a market perspective, we observe that US stocks and the bond market continue to view credit issues in a fragmented manner: after a targeted deleveraging, the stock market has resumed its previous posture of blind faith, but the bond and foreign exchange markets continue to mercilessly issue votes of no confidence. The early bottoming of gold and silver signals a relatively clear consensus among central banks: the era of Western currencies racing to the bottom no longer accepts mere verbal interventions; the overarching trend is unstoppable. At this moment, we are not overly concerned about a further bursting of the US stock market bubble in the short term. More attention is focused on how the next step of liquidity release, represented by FIMA, will evolve.
3/ Looking ahead, for Q3-Q4, we remain optimistic about rigidly constrained resources in the global supply chain, such as copper and electricity, as well as gold, which continues to price in the trend of monetary credibility loss. Regarding the digital currency market, we believe it is difficult to see significant outperformance before the release of excess liquidity and the full pricing of marginal AI growth.
Overview and Commentary on Overall Market Conditions and Trends:
Regarding market trends, our main viewpoints are:
1. Resources and commodities like gold remain the preferred liquidity-absorbing assets over Bitcoin for now. The consolidation over the past few months has been very healthy:
2. The bullish trend for RMB-denominated assets remains clearly established and should not be overly doubted. Taking the core STAR 50 Index of this market cycle as an example:
3. Not only have spot copper prices hit new highs first, but key resource country stock indices and foreign exchange rates are also at a critical juncture nearing a directional breakout:
Considering the current trends in foreign exchange and bond markets, we lean towards the view that bulk resource stocks, including gold and silver, are approaching the end of their current consolidation phase. Given that valuations for some assets, even after a potential rebound, are equivalent to a generously free embedded call option on rising metal prices, and against the backdrop of an inevitable slowdown in the marginal growth rate of AI, some non-ferrous metal assets in the RMB market deserve attention.
From a macro perspective, we attach great importance to the predictive guidance for future Fed behavior offered by the recent US-Japan joint currency intervention and the interaction between Warsh and Bessent. In fact, a Fed Chair attempting to become a Jiajing Emperor (Ming Dynasty emperor known for seclusion and delegation) at the end of an empire is inherently unreasonable. The Treasury Department directly intervening using tools like FIMA to overstep the FOMC and serve the supreme leader appears to be the actual behavior being honestly enacted. As a friend remarked: reduce communication, fabricate data, whitewash reality, and the Great Ming Dynasty can continue its revelry. Based on this, if one were to choose a strategy with a significantly positive Expected Value (EV) over a 3-year horizon, going long on non-ferrous metal resources is also a very good choice.
