Trump is clearly in an awkward position now; the crisis artificially created in April did not force the Federal Reserve to cut interest rates, and the wealth effect from the subsequent rise in the US stock market will not reduce inflation. By the way, I think it would be surprising if the Fed could cut rates this year.
What Trump needs most is money, so he is trying to seize this opportunity to attempt the same tricks as in April once again. You can see him starting to complain about employment data, creating a recession atmosphere, and trying to extend his reach into the Federal Reserve. In the stock market, he aims to eliminate the wealth effect, prompting 'investors' (not speculative funds) to inject money into the United States because he knows that just the liquidity released through REPO is definitely not enough.
This time is no different; we are in a market driven by a few tech stocks, the liquidity expectations provided by Bessenet (the Treasury buying short-term bonds), and the mechanical flow of buyback funds (market makers' positioning, quantitative funds or CTAs judging based on volatility, etc.). Essentially, it is still primarily speculative funds. Moreover, you can see that the market is overly complacent, which is why you observe the rapid decline in de-bubbling.
So how far can it drop? The resonance of technical analysis and regression models suggests that around 6,000 is a reasonable target. However, considering that the slope of the rise since April is basically consistent with that after March 2020, we actually experienced several adjustments of over 5% during that round of increases. Therefore, even if we ultimately arrive at approximately a 10% adjustment this time, I would not be surprised, and it could also align with the narrative of moderate recession pricing, which would be around 5,700, thus filling the gap.
What about BTC? The obvious difference this time is the allocation by institutions and listed companies; it is a liquidity-driven market. MSTR's success has made others envious, leading more people to greedily join this Ponzi-like game. Meanwhile, BTC is also becoming more mainstream. The Middle East's relaxation of cryptocurrency regulation essentially targets control over digital oil. The United States has actually recognized this. Combined with the previous text, the U.S. needs investors' money, and the Middle East can use cryptocurrency to continually inject money into the U.S., thereby creating a new pattern similar to the Petrodollar, while the East is once again sidelined.
To achieve this, the native cryptocurrency whales must exit. This has already been accomplished quite thoroughly with ETH, but not with BTC yet. Therefore, we will certainly experience another large-scale cleansing; insiders will continue to buy to complete the restructuring of asset holdings. This year, I believe the biggest target could be 200,000, while the largest expectation for a drop is back to around 80,000. Thus, I will accumulate in coin terms during significant declines to ensure I have enough profit when reaching the peak.
In summary, the opportunities presented by the market are right in front of us; we must wait patiently.
