Today is May 19, and many people are likely familiar with the number 519. On May 19, 2021, the crypto market experienced a massive crash, with Bitcoin's price plummeting from around $44,000 to $29,000 (a drop of over 34%). Ethereum was halved, and other altcoins like Dogecoin also saw significant declines, leading to liquidations for many investors and causing the market to fall into extreme panic.
Yesterday (May 18), Bitcoin briefly broke through the $107,000 mark, just a hair away from its historical high. Perhaps it is still haunted by the shadow of 519 from a few years ago. Today, Bitcoin continued with a slight pullback, indicating that it cannot escape the panic associated with the anniversary...
Comparing the current market situation, the market in the three months after Trump's inauguration is quite similar to the 519 period, being at the peak of a bull market. However, this wave has retreated along with the stock market, and global risk assets have been affected by tariffs and the Federal Reserve's dollar hegemony crisis. Nevertheless, Trump's policies on crypto have had a positive effect, and institutions are starting to dominate the market. Thus, Bitcoin only fell from 109,000 to a low of 75,000. However, since this wave of capital focused on Bitcoin, altcoins have not fared much better than during the 519 period, with many projects dropping more than 3x from their peak. This can only be described as the altcoin market indeed mirroring the 519 situation, and even Bitcoin has returned above 100,000, while most altcoins have not returned and are hovering at historical lows.
Only a few sectors like meme and AI agents have rebounded significantly. Whether altcoins can break out of the post-519 event bull market will also depend on favorable policies and capital influx, such as Bitcoin's strategic reserves attracting real capital to the crypto market, the Federal Reserve initiating a rate-cutting channel, and the improvement of legal and regulatory frameworks for cryptocurrencies, with more institutional capital entering the market. Only then can the capital potentially flow into altcoins, leading to a real altcoin bull market. The first milestone is Bitcoin reaching an all-time high, followed by a decline in Bitcoin's market share. To gauge the altcoin bull market, just look at the ETH/BTC exchange rate trend.
In June, the U.S. is expected to undertake a major action, borrowing new debt to pay off old debt. This will release capital and is likely to bring a wave of liquidity into the crypto space. Coupled with small company stocks in the U.S. stock market and gold, June-July may welcome a wave of profitable trading, which we can call the "U.S. Debt Replacement Bull Market."
What exactly is this matter?
In June, $6.5 trillion of old U.S. debt will mature, and at least $1.42 trillion of new debt must be issued to fill the gap. The question is, who will buy this new debt? How high must the interest be for someone to want it?
China will definitely not buy anymore, as Trump has already taken many actions against China, and in March, they reduced their holdings of long-term U.S. debt by 27.6 billion. Now the UK is the second-largest holder of U.S. debt, while China has dropped to third place, and other smaller allies cannot be relied on either. No one has so much money to take over, and if foreigners are forced to take over, interest rates would have to skyrocket, which the U.S. government cannot afford.
Now we can only rely on the Federal Reserve to directly activate the money printer, printing trillions of dollars to buy bonds, forcibly pushing bond interest rates to rock bottom.
Don't be fooled by Federal Reserve Chairman Powell's tough talk about not injecting liquidity; in reality, there is no choice. In the end, the Federal Reserve will definitely absorb more than 90% of the new debt, while others will only buy a small amount symbolically.
If this scenario plays out, it would mean flooding the market with money. When there is more money, it will flow into financial markets, cryptocurrencies, small company stocks in the U.S., gold, and other safe-haven assets.
Although altcoins may still fluctuate up and down for now, if there are no negative factors during this period, they should not hit new lows. Once the capital arrives in June-July, the altcoin phase of the bull market will continue.
In the coming time, we will slowly build our positions as signals arise. If altcoin prices return to the lows seen in April, we can buy in multiple batches. This opportunity for capital loosening brought about by the adjustment of U.S. debt may be the best opportunity to make money in the coming year.
There's no rush to bottom-fish. In a fluctuating market, we need to take our time. Last year, before Trump's election, we followed the rhythm and operated slowly. When the market trend comes in June-July, catching it once will be enough to sustain you for a year.
