Regarding the surge of the Taiwan dollar, let's review the market performance from last Friday and this Monday:
Oil prices fell, U.S. Treasury yields rose, yet the dollar index declined, gold prices increased, and after a rise on Friday, U.S. stocks closed with a doji on Monday, while the Chinese yuan, Hong Kong dollar, and other Asian currencies collectively strengthened.
What kind of hot money is driving the rise of Asian currencies? What is the underlying purpose?
In addition to intuitive factors such as trade friction and the flow of insurance funds, does the demand for safe-haven assets play a key role?
The decline in oil prices has intensified concerns about a shrinking global demand;
Rising U.S. Treasury yields should support the dollar, but it has actually weakened, indicating that institutions are simultaneously selling off dollar bonds and related assets; gold prices have strengthened, becoming the first choice for capital seeking safety;
U.S. stocks are oscillating at high levels, with Monday's doji revealing a divergence between bulls and bears, indicating insufficient willingness from institutions to chase higher prices.
Asian currencies are broadly rising, with the Taiwan dollar particularly prominent, showing a significant influx of cross-border capital that cannot be explained simply by central bank interventions or trade surpluses.
Looking back to early April, capital quickly rotated among undervalued assets, forming a cycle of increases and decreases from 'U.S. stocks → gold → bitcoin → Asian currencies'.
Currently, bitcoin is in a tug-of-war around 94,000, possibly due to shifts between large holders and retail investors.
Although the stock, bond, and currency markets have begun to stabilize, institutions are more focused on the bond and currency markets, while retail investors closely watch U.S. stocks — the moderate upward movement of U.S. stocks resembles the price range of bitcoin between 95,000 and 97,800, which could easily trigger retail investors' expectations of a 'bull market return'.
The unusual behavior of institutions selling dollars and U.S. Treasuries, combined with statements from the Berkshire Hathaway shareholder meeting, may suggest that they predict a larger crisis is brewing and that the market is far from bottoming out.
Bitcoin has a high correlation with U.S. stocks; therefore, low-leverage short strategies are more rational.
In the context of U.S.-China rivalry, Japan has become a balancing point due to geopolitical and historical factors, rising as a safe-haven asset hub, which also explains Buffett's long-term strategic consideration of holding Japanese assets.
Currently, gold, along with the euro and yen, has accumulated significant gains, forcing capital to shift towards Southeast Asia; however, this region has limited capital capacity and high volatility, making it less than ideal as a safe-haven asset.
Bitcoin possesses 70% characteristics of tech stocks and 30% traits of gold as a safe haven, thus caution is warranted regarding the risks associated with a downturn in U.S. stocks.
