Although the Federal Reserve has not cut interest rates yet, the cryptocurrency market has already started to loosen up. The stablecoin bill has passed, and thereafter, the regulation of DeFi is beginning to ease. The old money has basically no concerns, and after such a long period of consolidation, prices are very low. The old money is also starting to buy the dip. Asset management is all about stability, profitability, and compliance. Now that the conditions are basically met, we will soon see Ethereum and DeFi take off.
It is important to understand that although the Federal Reserve has not cut interest rates, stablecoins continue to be a printing machine without concerns, just a unique printing machine for the cryptocurrency market and US Treasury bonds. The Federal Reserve itself needs to cooperate in harvesting some countries, but so far, there has not been much of a good effect. Continuing to bear high interest rates in the game is not very useful. The risk the US is facing is a US Treasury crisis that must be resolved, as a large amount of US Treasury bonds is maturing in June. Therefore, there is urgency to clear the obstacles for stablecoins and DeFi before the large US Treasury bonds mature, and then use the funds coming in through the stablecoin channel to purchase US Treasury bonds to stabilize the market. Old money and asset management institutions coming in to take over is all about making money, which is why the DeFi lending sector is set to take off. It also explains why there was a drop before—it was to make way for large funds to come in and buy the dip.
Next, there will be a continuous influx of funds from various financial sectors into DeFi. For DeFi to take off, it must arrange for altcoins to go wild, with extreme volatility and both long and short liquidations. The current logic of capital circulation is that old money buys stablecoins to enter DeFi, the funds from stablecoin issuing companies go to purchase US Treasury bonds, and then market makers cooperate to create wealth, leading to the rise of altcoins. More speculative myths like Liangxi and James will emerge. Retail contracts cannot hold on, releasing their speculative nature and leading to liquidations. Now the opportunity has arisen, and it seems to be all about stabilizing the US Treasury market, with retail buyers involved. Everyone has their own fate; it depends on how you choose. Snatching food from the tiger's mouth is not easy. The subsequent RWA will be the long-term hold product after interest rate cuts and economic recovery.