Arthur Hayes: How will Bitcoin fall to a system argument of $ 70,000

Source: Arthur Hayes, " The Ugly "

Compilation: JK, ODAILY Planet Daily

" Ugly Reality" is the first in my three series of articles. "Beautiful Body" will discuss the rise of political Meme currency, and "The Bad side" will explore how the U.S. cryptocurrency holders can be frustrated by the Trump administration's encrypted regulatory policy.

Disclaimer: I am an investor and consultant of Ethena. This company is a parent company of $ USDE Stable Coin. It has been mentioned many times in this article.

The text is as follows:

"Stop -keep 30 -meter distance." This is a guide that a guide took me a few weeks ago when he was skiing for a dormant volcano. Our steps along the way are very easy, until the level of 1600 meters, the situation has changed.

When we stopped on the ridge line together, my guide said: "Just that section made my stomach tighter, and the naphawam risk was too high, let's start skiing here." I did not have the same intuition, I couldn't detect it, I couldn't detect The slight but far -reaching change in the snow layer. This is why I always choose to ski with the guidance guide -the seemingly bland terrain may become my cold tomb. You can never determine whether sliding through a slope will cause avalanche, but if the expected risk exceeds your comfort range, then the cautious approach is to stop, re -evaluate and change the route.

In the first article of this year, I announced to the world that my attitude towards the market is so much that at least in the first quarter. However, with the end of January, my excitement has dissipated. The subtle changes of the central bank's balance sheet level, the fluctuation of bank credit expansion, the relationship between the 10 -year Treasury yield and the price of stocks and Bitcoin, and the crazy $ TRUMP price trend all made me feel disturbing. This feeling is very similar to the mood before the market collapse at the end of 2021.

History will not be simply repeated, but it is always similar. I don't think this round of bull market is over, but from the perspective of forward -looking probability, Bitcoin is more likely to fall to $ 70, 000 to $ 75, 000, and then rose to $ 250, 000 before the end of the year, instead of continuing to continue There was no call to rise. Therefore, Maelstrom has increased the pledge of Ethena $ USDE it held to the highest level of history and continues to lock in profits in multiple cottage positions. We still maintain a large cleansing position, but if my intuition is correct, we will hold a lot of cash reserves in order to buy it when Bitcoin appears back.

Such a range of callbacks will be very miserable, because the current market's bullish mood is extremely high. Trump's general administrative orders are constantly expressing remarks that are conducive to cryptocurrencies. By pardoning Ross Ulbricht to boost market emotions, and recently launched its own MEME coins, igniting the enthusiasm of the crypto market. However, except for the launch of MEME coins, most of these are expected. The market has not fully realized that the addition of fiat currency in the United States, China and Japan is slowing down.

The remaining part of this article will discuss related charts and the announcement of monetary policy of various countries. These factors have prompted me to reduce MAELSTROM's cryptocurrency positions.

USA

My views on US monetary policy are affected by two firm views:

• 10 -year US Treasury yields will rise to 5% to 6%, causing a small financial crisis.

• Fed officials hate Trump, but they will take necessary measures to maintain the financial system under Pax Americana (American Peace).

Below I will explain the interaction between these two perspectives.

10 -year national debt

The US dollar is the world's reserve currency, and US Treasury bonds are global reserve assets. This means that if a country or institution has the US dollar surplus, buying U.S. Treasury bonds is the safest way to store value, and at the same time, it can also obtain interest benefits. As US Treasury bonds are regarded as "zero -risk" assets, financial institutions can use almost infinite leverage to borrow funds or assets to purchase them. However, if the value of government bonds declines rapidly, the "fairy tale" in accounting will evolve into a nightmare for economic nightmares, and systemic financial institutions may go bankrupt.

10 -year Treasury yields are the benchmarks that affect the pricing of most medium and long -term fixed income tools (such as mortgage and car loans). It is one of the most important asset prices in the fiat currency system, so the 10 -year yield is crucial.

Since 1913 (the year of the Federal Reserve), each financial crisis has been "solved" through printing, leading to leverage in the financial system. Therefore, the threshold for yields in crisis in the financial system is getting lower and lower. When the 10-year yield broke 5%, the former US Treasury Minister Bad Gurl Yellen immediately issued a policy to issue more short-term T-Bills, which is essentially an invisible Currency money printing method. As a result, the 10 -year yield fell to 3.60%, becoming a local low in this round of cycle.

If 5% is the critical point of the financial crisis, why does the yield rose from the current 4.6% to 5% or even higher? To answer this question, we need to understand who is the main incremental buyer of US Treasury bonds.

Who is buying these "garbage" government bonds?

As we all know, the US government's debt issuance is unprecedented. As of now, the scale of US Treasury bonds has reached US $ 3.622 trillion, more than doubled compared with US $ 16.70 trillion at the end of 2019. So, who bought these government bonds?

Let's take a look at a few major potential buyers.

1. Federal Reserve

The Federal Reserve has been implementing quantitative loose (QE) from 2008 to 2022, and has purchased tens of trillion US dollars in Treasury bonds during the period. However, since 2022, the Fed has stopped printing (quantitative tightening, QT) and no longer increases holding government bonds.

2. American Commercial Bank

U.S. Commercial Banks bought a lot when the price of government bonds was at a historical high. As a result, "temporary inflation" and the Federal Reserve's fastest interest rate hike cycle in 40 years. To make matters worse, according to the Basel III (Basel III) capital adequacy ratio, banks need additional equity as mortgage when purchasing government bonds, which greatly increases the cost of holding government bonds. Therefore, the balance sheet of commercial banks in the United States has been completely occupied, and it is no longer possible to buy more national debt.

3. Main foreign exchange surplus country

Here refers to oil exporters (such as Saudi Arabia) and commodity exporters (such as China and Japan). Although these countries have obtained a large number of dollars from global trade, they have not actively purchased U.S. Treasury bonds. For example, as of November 2024, China's 12 -month trade surplus was as high as 962 billion US dollars, but during the same period, China 's U.S. Treasury held by US Treasury had reduced by about 14 billion US dollars.

So, who is buying these "rough single -layer toilet paper" national debt?

Although the United States is desperate to force the global financial system into Treasury bonds, the debt crisis has not yet erupted. I ask again, who is buying these junk bonds? There is no doubt that anyone who buys these things will not respect their chrysanthemums.

Let us applaud the relative value (RV) hedge fund. These funds are usually registered in the UK, Cayman Islands, Luxembourg and other places to avoid taxes, and they are marginal buyers of US Treasury bonds. How do I know? The recent quarterly refinancing announcement (QRA) of the Ministry of Finance clearly stated that these hedge funds are marginal buyers currently supporting the yield of government bonds. In addition, if you check the monthly TIC (international capital flow) report released by the US Treasury, you will find that the above -mentioned countries and regions have accumulated a large number of US Treasury bonds.

How does hedge funds conduct national debt arbitrage transactions?

As long as the transaction price of spot Treasury bonds is lower than the corresponding national bond futures contract price, hedge funds can profit through Basis Trade. Because the price difference is extremely small, the only way to make a lot of money is the name of billions of dollars in the transaction. However, hedge funds do not have so much cash, so they need a bank system to provide leverage.

The transaction process is as follows:

• Hedge funds purchase government bonds with cash, but before actual payment, they will sign the repurchase agreement (REPO) with large banks.

• Hedge funds deliver government bonds, banks provide cash.

• The fund pays the national debt to purchase funds with this cash.

• In the end, hedging funds bought government debt with other people 's money, and they only needed to pay the futures exchange deposit (such as the Chicago Commodity Exchange CME).

In theory, as long as the following conditions are established, the RV hedge fund can purchase U.S. Treasury bonds unlimited:

• The bank's balance sheet has enough space to support the repurchase transaction (REPO).

• The repurchase interest rate is low enough, otherwise arbitrage transactions will not be profitable, and hedge funds will stop buying government bonds.

• The deposit requires a lower level. If hedge funds need to invest more margin in the futures market for hedging, the number of bonds they can buy will be reduced. The capital of hedge funds is limited. If most of the funds are locked in the exchange deposit account, their transaction volume will be reduced.

However, due to the limitations of the above factors, the RV hedge fund's buyer's role is facing threat.

The impact of bank balance sheet/ repurchase interest rate

According to the Basel III, the bank's balance sheet is a limited resource. The relationship between supply and demand is determined that when the space of the balance sheet is approaching, the price (that is, the repurchase interest rate) will soar. Therefore, when the Ministry of Finance continues to issue more national bonds, RV hedge funds conduct more arbitrage transactions, use more repurchase financing, occupy more bank's balance sheet space, and eventually lead to overnight repurchase interest rates (O/N repo Rate) Sight.

Once the repurchase interest rate has soared and the fund stops purchasing, the US Treasury bond market will collapse.

If you want to understand the underlying mechanism of the liquidity of the financial market, it is recommended that you subscribe to the research report of ZOLTAN POZAR , and he has an in -depth analysis of the mechanism of the currency market.

Exchange margin requirements

Simply put, the higher the volatility of assets, the higher the security requirements. When the price of bonds falls, the volatility rises. If the price of bonds falls/ the yield rises, the volatility (can refer to the MOVE index) soared. When this happens, the bond futures margin requirement increases, resulting in the rapid decline in the purchase volume of bonds of RV hemons.

The above two factors interaction to form a ReflexIVity mechanism. The question is, is there any way to solve the "Gordon Knot" through monetary policy, so that the RV hebility fund will continue to provide financing for the Ministry of Finance?

The answer is of course. Our currency controller can always use accounting methods to resolve the financial crisis. In this case, the Federal Reserve can suspend the leverage (SLR, SUPPLEMENTAL Leverage Ratio). If SLR rules are suspended so that they are no longer applicable to U.S. Treasury and related repurchase agreements (REPO), banks will be able to use unlimited leverage.

If the SLR is exempted from policy effect, the following situation will occur:

• Banks can purchase government bonds unlimited without mortgage capital, thereby release the balance sheet space.

• The bank 's balance sheet is no longer limited, and they can provide low -cost repurchase financing .

The Ministry of Finance will add two marginal buyers: commercial banks and RV hedge funds. Bond prices have risen, yields have decreased, and margin requirements are reduced -market recovery prosperity is peaceful.

If the Fed is willing to be "more generous", it can stop QT (quantitative tightening) and restart QE (quantified loose). In this way, the Ministry of Finance can get three major border buyers.

The Ministry of Finance and the Fed knew the above issues. The banking industry has called for many years, hoping to obtain SLR exemption policies similar to 2020. The recent report of the Treasury Borrowing Committee (TABCO) report clearly states that the market needs SLR to be exempted. At the same time, the Fed should restore QE to the liquidity of the government bond market.

The only thing that is missing is the political willingness of the Federal Reserve, which also aroused my second point of view.

The political position of the Federal Reserve

The remarks of officials before and after the Fed, and their actions during Biden's administration, made me believe that the Federal Reserve has done its best to obstruct Trump 's policy.

However, the Federal Reserve's constraints are limited. If a large financial institution is facing bankruptcy, or the stability of the entire empire is threatened, the Fed will not hesitate to adjust bank regulatory rules, reduce capital costs, and even restart the notes.

How do Federal Reserve officials evaluate Trump?

Below is the remarks of two senior Federal Reserve officials. The first is the former Federal Reserve and the Fed of New York, William Dudley (2009-2018 New York Fed Chairman), and the second is the current Federal Reserve Chairman Jerome Powell. "Beta Cuck Towel Bitch Boy": Beta Cuck Towel Bitch Boy:)

" President Trump continues to weaken corporate and consumers' confidence in China and deteriorates the prospects of economic. It can be clearly stated that it will not pay for a government that constantly make mistakes in trade decisions, and let the public know clearly that Trump must bear the policy consequences by himself ... It can even be said that the election itself is one of the scope of the Federal Reserve's duties. After all, Trump's re -election is obviously threatened to the independence of the United States and the global economy, the Federal Reserve, and its employment and inflation goals. "

—— "The Federal Reserve should not promote Trump's policy", William Dedley

How does the Fed respond to Trump's victory?

At a press conference on a policy meeting, when asked how the Fed responded to Trump's victory, Jerome Powell said:

" Some people have indeed taken a very preliminary step, and began to incorporate the economic impact on the policy into a highly assisted prediction at this meeting."

This is very interesting. Before the election, the Fed used a set of economic forecasts to reduce interest rates to help Kamala Harris, but now because of Trump 's victory, they have begun to consider another prediction. In fact, the Federal Reserve should always use the same set of estimates in the months before the election. However, what do I know? I'm just a crypto Muppet.

What did the Fed do for Biden?

Initially, we heard the saying "Transition". Remember? Powell claims that inflation caused by the fastest and largest currency money printing in American history is just a brief phenomenon, which will soon disappear. However, four years have passed, and the level of inflation has always been higher than the Fed's own control, false, and dishonest inflation indicators.

They used these Sophistry to postpone interest rate hikes, and did not start tightening monetary policy until 2022, because they knew that interest rate hikes could trigger a financial crisis or economic recession. Their judgment was right, and the Federal Reserve directly led to the regional banking crisis in 2023.

Subsequently, the Fed was deaf, and the "bad girl" Bad Gurl Yellen completely destroyed the Fed's currency tightening policy. Since September 2022, she has issued more short-term T-Bills to get the liquidity of Reverse Repo Program (RRP). The Fed can at least stand up against the Ministry of Finance. After all, they claim to be independent of the federal government, but they have not done so.

By September 2023, the Federal Reserve suspended interest rate hikes when inflation is still higher than the goal. By September 2024, they even opened the cycle of interest rate cuts and made money printing. Is the inflation lower than the goal? No.

The Federal Reserve has a word of mouth to fight inflation, but when politics needs to maintain low cost financing and push high financial asset prices, the Fed cooperates with the performance.

Why do politics need to do so? Because the Biden government was destined to fail from the beginning. Half of the United States believed that Biden was a dementia old man, and his political party cheated in the 2020 election. Afterwards, the Republicans' judgment on Biden's "vegetables" characteristics is right, and whether he cheats is likely to be right. In any case, in order to prevent the Republican party from seizing Congress and preventing Trump from re -election in 2024, the Federal Reserve does not hesitate to avoid the outbreak of the financial and economic crisis.

How does the Fed protect the existing financial system?

In some cases, the Federal Reserve even exceeds the scope of duties to help the Democratic Party. The most typical example is the launch of the Banking Term Funding Program.

In the regional banking crisis in early 2023, the Fed's interest rate hike policy and the subsequent collapse of the bond market caused a large amount of U.S. Treasury bonds purchased by banks held in 2020-2021, leading to a financial crisis. The Federal Reserve noticed the crisis and adopted a special political strategy: let the three banks that support cryptocurrencies closed to appease Elizabeth Warren (senators, and have attacked the crypto industry many times). Subsequently, the Fed directly provided invisible pockets for US Treasury and mortgage support securities (MBS) on the bank 's balance sheet as high as US $ 4 trillion.

Afterwards, BTFP may be excessively reacted, but the purpose of the Federal Reserve is very clear: to pass signals to the market. If Pax Americana's financial system is facing a significant threat, they will not hesitate to start the money printing machine and make full shots.

Bad blood

Powell is a traitor. He was appointed by Trump in 2018, but now he has completely betrayed it. This is not surprising, because Trumpism is weakened by a group of unfaithful men during his first term. You can think that this is a good or bad thing, but in any case, the relationship between Trump and Powell is now completely ruptured.

After Trump recently defeated Biden, Powell immediately clarified the outside world's doubts about his possible resignation, saying that he would fulfill his complete term until May 2026.

Trump has always emphasized that the Federal Reserve must cut interest rates to "make American again". Powell responded in his usual way -the Fed's decision -making "Data Dependent". This means that they do whatever they want, and then let the intern of the Federal Reserve basement make up a set of economic theories to provide the so -called "academic basis" for their decisions. Remember the DSGE, IS/LM model, and "Ricardian Equivalence" (Ricardian Equivalence)? If you are not working at Marriner Eccles Building at the Federal Reserve Headquarters, the Federal Reserve Headquarters, those things are all nonsense.

How does Trump make the Federal Reserve "standing"?

He can make a small financial crisis erupt. The following is a possible script:

• Continue to maintain a large -scale fiscal deficit, which requires the issuance of a large number of Treasury bonds. This can be seen from the "Meme Department" that appoints Musk's leadership without real power. Musk's wealth relies to a large extent on the billions of dollars of subsidies and tax discounts provided by the government (such as the policy enjoyed by Tesla). This so -called "DEPARTMENT of Government Efficience (Doge) is not a real federal government department, because the establishment of a new department requires Congress legislative authorization. It is just a "honorary consultant role", directly under Trump, without real power. M EME is very powerful, but they cannot reduce medical insurance expenditures or national defense budgets. Only Congress Members can make these difficult decisions, but why do they make such a thing that affects the re -election opportunity in 2026?

• Immediately provoking the debt limit dispute. Barst (BESSENT, possible Treasury Minister) can use various financial tools to delay the time of government closure. In the summer of 2023, Yellen used the funds of the general account of the Ministry of Finance (TGA, TRASURY General Account) to provide additional liquidity for the market. Continue to borrow. But Bason can choose to stand by without consuming TGA funds. If the Ministry of Finance does not invest funds, the US Treasury bond market will be paralyzed, and investors will sell government bonds madly due to concerns about the government's breach of contract.

This series of operations will quickly promote the 10 -year US Treasury yield to exceed 5%.

If Bason announces that the government will touch the upper limit of debt on a certain date and the Ministry of Finance will not use TGA funds to maintain government operations, the turbulence of the financial market may be quickly fermented in a few days.

When the yields of Treasury bonds have soared, the stock market will plummet, and some large financial institutions in the United States or overseas will face a serious crisis of liquidity. The Fed will be forced into a dead end by political reality. In order to save the financial system, they have to take the following measures (part or all):

• Provide SLR (supplementary leverage) exemption so that banks can purchase government bonds unlimited leverage.

• Significantly cut interest rates.

• Stop quantitative tightening (QT).

• Restart the quantitative loose (QE).

If the Fed takes these actions, Trump will publicly praise the Federal Reserve for "making great contributions to the United States", and the financial market will resume vitality.

The above problems may develop into a crisis due to the uncertainty of the debt limit. As for the detonation of the crisis, it depends entirely on Trump. If the crisis occurs in the later stage of Trump's ruling, the Republican Party will be more likely to be blamed due to the crisis, rather than the leverage accumulated by the Biden government. Trump must ensure that voters blame the responsibility on Biden and Democratic Party, rather than him or the Republican Party, otherwise the Trumpist and MAGA movement will die in only two years. Essence

The US dollar printed tide is coming, but the premise is that the Fed must first stand to Trump. The Fed is not the only financial driving force. Is the banking system creating credit?

The answer is negative. Judging from my bank credit index, the index is the sum of the Fed's bank reserves, deposits and liabilities, and current credit growth has fallen into stagnation. The flow of funds must be kept unobstructed. If the expansion of credit expansion is lower than expected, the market will vomit the gains brought by Trump's victory.

China

In the third quarter of 2023, the People's Bank of China announced a series of measures to boost economic. In essence, these measures are printing money. They reduced the bank's deposit reserve ratio, began to buy Chinese Treasury bonds, and helped local governments to make debt -re -financing. These measures ignited a wave of violent rebound in the A -share market.

If you are obsessed with Xiaohongshu and have not realized when the People's Bank of China and the government announced these re -inflation policies, I have been circled on the comprehensive index chart above. The government hopes that investors will enter the venue first to welcome the asset prices brought by RMB money printing, and this strategy will work.

In the article "Come on Bitcoin Let's Go Bitcoin", I have demonstrated that China has prepared to depreciate RMB when necessary, as an inevitable result of a large -scale banknote printing policy. The US dollar against RMB is allowed to rise, which means that the US dollar is strong and the RMB has weakened. Everything is planned as planned until January 2024, China suddenly changed its policy.

On January 9, 2024, the People's Bank of China announced the termination of government bond purchase plans. The central bank involved in the market and took the initiative to promote the appreciation of the renminbi. This means:

• The central bank cannot relax the financial environment in China through the depreciation of the renminbi

• At the same time, it takes the initiative to intervene to promote the appreciation of the renminbi

Economist Russell Nipil believes that China is preparing for difficult negotiations with Trump to avoid consuming policy tools in advance. He predicts that China and the United States may reach a certain "big transaction" because both countries want the currency to depreciate to stimulate exports and improve the domestic economy. However, neither leaders of both sides can directly compromise, otherwise they will be regarded by domestic people as weak and violate their campaign commitments.

No matter what the real reason is, China has chosen to stabilize the RMB instead of continuing to promote economic recovery. Therefore, the RMB 's banknote printing machine has been temporarily closed until it will be notified separately.

Japan

The Bank of Japan (BOJ) fulfills its commitment to continue to raise interest rates. At the recent meeting, they raised the policy interest rate by 0.25% to 0.50%. One of the direct consequences of the normalized interest rate plan is that the expansion of the central bank 's balance sheet has fallen into stagnation.

With the rise of policy interest rates, the yield of Japanese Treasury (JGB) has risen to the level that has not been seen for nearly 15 years.

The growth rate of currency supply is far lower than the past, but its price (interest rate) is rising rapidly. This is not a favorable market environment for financial assets for fiat currency.

USD against the yen (USDJPY) is in the top process. In my opinion, in the next 3 to 5 years, the exchange rate of the US dollar against the yen will reach 100 (that is, the US dollar depreciation, and the yen appreciates). As I have analyzed many times before, the appreciation of the Japanese yen will promote Japanese companies (JAPAN Inc.) to return the capital of trillions of dollars in China, and those investors who borrow yen must sell assets to cope with the financing cost Surgery.

For the global fiat currency financial market, the biggest concern is that this selling on the price of US Treasury bond prices is. This will become a long -term structural resistance, and Bessent must find a way to deal with it. In the end, the U.S. government will have to release the liquidity of the dollar through the Swap Line Facility to solve the problem through some kind of US dollar swap. It is reasonable.

I have explained why the liquidity status of the US dollar, RMB and yen is not good for the price growth of fiat currency financial assets. Now, I will further explain the impact of this Bitcoin and encryption capital market.

The correlation of Hoho Hoho

We need to discuss the most worried issue of bond investors under Pax Americana (American Peace). I will spend some time to analyze a very valuable chart made by Bianco Research. This chart shows the correlation of the prices of 1 year and 5-year stock-bonds, and draws some conclusions.

From the 1970s to the early 21st century, inflation was the "Boogie Man" of American investors. Therefore, stocks and bond prices are positive . When inflation is intensified and a negative impact on the economy, investors will sell bonds and stocks at the same time.

This situation changed after China joined the World Trade Organization (WTO) in 2001. American capitalists began to outsourcing manufacturing to China in exchange for the growth of domestic enterprises' profits. Since then, the focus of market attention is no longer inflation, but economic growth. Under this new paradigm, the decline in bond prices means that economic growth has accelerated, so stocks should perform well, resulting in a reduction in correlation between stocks and bonds.

However, since 2021, you can clearly see that the correlation between 1-year stock-bonds has risen significantly. This is because the FLU-19 crisis (financial stimulus during the epidemic) has caused inflation to make a comeback and soared to the highest level in 40 years. The Fed started the interest rate hike period in early 2022. During this period, bond prices and stock prices fell simultaneously. This relationship returned to the model from the 1970s to early 2000, that is, inflation has become the main concern of the market.

This is particularly obvious in the performance of 10 -year US Treasury bonds. When the Federal Reserve suspended interest rate hikes in September 2023 and started to cut interest rates in September 2024, inflation is still higher than the 2% target, but the market is still concerned about inflation.

The following three charts show this trend:

• Federal Reserve Federal Fund interest rate upper limit (white) VS. 10 -year US Treasury yield (yellow)

It can be seen from these charts that the market 's fear of inflation is increasing, because even if the Fed relaxes monetary policy (interest rate cuts), the yield is still rising.

Compared with the first two pictures, the last round of interest rate cuts from the end of 2018 to March 2020, when the Federal Reserve reduced interest rate cuts at that time, the yield decreased simultaneously. This time, the situation is completely different.

No matter what others say, the price of currency will always affect the assets denominated by fiat currency. Technology stocks are extremely sensitive to interest rates, and you can see them as a bond with unlimited or long -term period. Simple mathematics tells us that when the interest rate of future cash flow has risen, the current value of technology stocks will decrease. When the functional disorders of the financial system cause the yield to break through a key level, this mathematical relationship will show its ugliest side.

The chart above shows the Nasdaq 100 index (white) VS. 10 -year US Treasury yield (yellow). It can be seen that when the yield is close to 5%, the stock market fell, and when the yield fell, technology stocks ushered in a sharp rebound. This is the market response typical presented by inflation as the main concern and not economic growth.

Let's integrate all the factors. The US dollar, RMB, and yen can be swapped in the global financial market, and they will eventually flow into large US technology stocks in the United States in some form. Whether you like it, this is a fact. I have just analyzed why in the short term, the United States, China and Japan have not accelerated the expansion of the supply of legal currency, and even in some cases, they are still raising the price of currency.

Inflation is still high, and in the context of global economic decoupling, it is likely to rise further in the short term. This is why I expect 10 -year US Treasury yields to continue to rise. So, when the market is rising, the market panic in inflation, and the rapid expansion of US debt and the rapid expansion of the US debt, and cannot find a new marginal buyer, how will the stock market react? They will plummet.

In the long run, the correlation between Bitcoin and the stock market is not high, but in the short term, their correlation may become very high. The 30 -day correlation between Bitcoin and the Nasdaq 100 Index is at a high level and continues to rise. If scientific and technological stocks have suffered a severe settlement due to the surge in 10 -year US debt yields, this is not a good sign for the short -term price trend of Bitcoin.

In addition, I always believe that Bitcoin is currently the only true market in the world, and it is extremely sensitive to changes in global fiat currency liquidity. Therefore, if Fiat Liquidity Crunch is about to occur, the price of Bitcoin will collapse in the stock market and become a leading indicator of financial pressure.

If the bond market is selling panic and sells systemic pressure on the financial market, the answer from the regulatory agency will be printed. First of all, the Fed will stand on Trump and fulfill its "patriotic duty" -the button (USD BRR) pressing the US dollar money printing machine. Subsequently, the People's Bank of China can also relax the monetary policy simultaneously without worrying about the depreciation of the RMB. Remember that the currency system is relative. If the Fed is printed on a large scale, then the People's Bank of China can print money simultaneously without affecting the US dollar against the RMB exchange rate.

As for Japan, the largest foreign exchange asset holding of Japanese Inc. is a financial asset for US dollars. Therefore, if these asset prices fall, the Bank of Japan (BOJ) will suspend interest rate hikes to relax the financial environment of the yen.

In short, a small financial crisis in the United States will provide its most desperate currency "nectar" for the cryptocurrency market. At the same time, this is also extremely beneficial to Trump's political interests. In summary, I think the probability of this situation occurred in the first quarter or the beginning of the second quarter was about 60%.

Trading probability and expectations

As mentioned in the foreword, when we perceive the risk of the avalanche, we stopped skiing. The point is not to verify unknown danger. Extending this metaphor to the encryption market, Maelstrom chose to keep a low match for the market to hedge risk. The core here is not right or wrong, but expected benefits (EV).

How to judge yourself wrong? In fact, you will never really know, but in my opinion, if Bitcoin exceeds 110, $ 110, $ 000 (that is, the highest point during the $ Trump tide), and accompanied by the non -perpher of the perpal contract (PERP) The Open Interest rises sharply, then I will admit defeat to replenish positions at a higher position.

More specifically, $ TRUMP has skyrocketed to nearly 1, $ 1 billion in complete dilution valuation (FDV), which is absolutely ridiculous market signal. I bought it a few hours after it was launched, and then sold it at half of the time during the weekend. The money made by this transaction is many times higher than the entire holiday expenses, and it is completed only through a few clicks on the mobile phone. The transaction should not be so simple, but in the fanatic period, it is so simple.

In my opinion, the skyrocketing signal of $ Trump is similar to the advertising logo of the FTX purchase of the US Professional Baseball League (MLB) referee when the bull market in 2021 -it symbolizes the approaching of the top of the market.

The core of the transaction is not right or wrong, but to maximize the perception of probability and the expected return. Let me explain my thinking logic. Of course, these probability are subjective perception, and the essence of investment is to make decisions under the situation of imperfect information.

Why do I think Bitcoin has 30% of the callback?

I have traded in this market for more than 10 years and experienced a three -round bull market. This range is very common in bull markets. More importantly, after Trump's re -election in early November 2024, Bitcoin quickly broke through the historical high set in March. Many of me, including me, have discussed extensively that Trumpism (Trumpism) will accelerate the process of printing in the United States, and other countries will also respond to their banknote printing to stimulate the country's economy.

However, the core point of this article is that these large -scale currency easing policies in the United States, China and Japan cannot start before the real financial crisis.

Therefore, I think the market will retreat to the previous historical high and completely spit the Trump market.

Trading strategy calculation:

• 60% probability: Bitcoin recovery 30%

• 40% probability: the bull market continues, Bitcoin rises 10%

Calculate expected income (EV):

(60% * -30%) + (40% * 10%) = -14%

Mathematics tells me that reducing risks is the right choice. I reduce risks by selling Bitcoin and hold more liquid assets (pledged USDE, the current annual yield is 10% ~ 20%).

If Bitcoin falls 30%, the cottage market will usher in a disaster. And this is exactly the field I really interested.

Maelstrom holds a large number of early investment and consultants AlloCations. We have cleared most of them. The highest quality project in the market, if Bitcoin falls by 30%, will plummet at least 50%.

The final large -scale clearing (Mega Liquidation Candle) will tell me when to "full warehouse" to acquire Crypto Dung on the market.

If I was wrong, my losses just made a profit in advance and sold some Bitcoin that had been bought with cottage. But if I am right, we have sufficient cash on hand, and we can quickly increase their positions in the market for sale, and earn 2 times or even 3 times the profit on the high -quality cottage coins.

End

When this article was submitted to me on January 27, 2025, the market was in a comprehensive panic. The reason was that investors began to re -evaluate their bullish logic of NVIDIA and American technology stocks, and all of this fuse was the release of DeepSeek. DeepSeek is an AI model developed by the Chinese team. The training cost is 95% lower than the latest models of Openai and Anthropic, but the performance surpasses them.

The characteristic of the bubble is that when investors begin to question a core belief, they will start to question all their beliefs. What I am most concerned about is the collapse of the faith in the market that is not important for "interest rates". The DeepSeek incident may promote comprehensive panic in Western investors, and began to pay attention to the global fiat currency liquidity crisis and the long -term upward trend of 10 -year US Treasury yields.

It is really ironic that China is fully embracing Open-Source, but the United States is still adheres to the Walled Gardens. Market competition is a wonderful thing, isn't it?