1/ Over the past month, the market has been fervently trading expectations, on the one hand betting on re-inflation from damaged global supply chains, and on the other hand trading rate hikes, whether based on factual developments or on expectations surrounding Vice Chair for Supervision nominee Wash. These two forces are like fire and ice, causing commodities and most equity assets to fluctuate constantly. However, technology, which is actually impacted by both, still benefits from the concentration of short-term liquidity.
2/ On a factual level, as we previously analyzed regarding the Strait of Hormuz situation, the chronic issues with the US's bloated balance sheet have exceeded the scope of what any single Federal Reserve Chair can resolve. All of Wash's hypothetical scenarios could only become reality when AI fundamentally alters social production relations. Until that day arrives, the majority of non-AI-leading nations worldwide (almost all except China and the US) will be the first to fall into a collapse of fiscal and monetary policies. By then, who sits as the Fed Chair will no longer be of great importance.
3/ From a trading perspective, crypto assets currently see little possibility within all the narratives mentioned above. We also observe that the 200-day moving average continues to strongly suppress the price trends of these assets. Even if the "anything but AI" sentiment spreads to "anything but mines," it's unlikely to change this situation. In this current phase of silicon-based versus carbon-based competition, there is no stage for crypto, but there certainly will be in the future. Rest assured.
Review and Commentary on Overall Market Conditions and Trends
Aside from hype, there isn't much noteworthy to discuss in the crypto market. The lackluster trading volume and scarcity of innovation are old news, and technical resistance is very evident. In fact, crypto assets could potentially be good tools for hedging against global liquidity risks. At this moment, it's difficult for any major market focus to directly link to crypto. Meanwhile, inflation/stagflation caused by supply chain damage clearly has more definitive large-capacity investment targets like gold and other metals, petrochemicals, and food. Looking at token distribution, Bitcoin also needs more time to consolidate and absorb selling pressure. The development of this variable is crucial. We expect this correction to persist until at least Q4 2026.
Looking ahead, we believe three events will successively become the dominant drivers of future market volatility:
1. In the short term, the market will highly focus on whether Wash will repeat the missteps of Besant or Musk, turning his stance into the next "333" plan.
2. The market is significantly underestimating the severity of substantial damage to a large number of global supply chains and the time needed for future repair. In the medium term, the market will eventually realize that local resource shortages and price volatility will far exceed initial expectations, similar to the situation during the pandemic.
3. Nations like the UK and Japan, which represent "AI non-beneficiaries + inflation first to fall," will successively face severe fiscal and monetary policy crises. We should hope that AI substitution does not occur too rapidly; otherwise, the existing credit system and national welfare fiscal systems could collapse swiftly.
One day, the market may understand that the bursting of the AI bubble could trigger a contagious credit crisis for some sovereign nations. The monetary and fiscal responses at that time might be the ultimate ignition for Bitcoin's final major bull run.
