1. The Federal Reserve's 'twisted' operation: this time the liquidity feels different.
In the past ten days, nearly 38 billion dollars have been 'released'. Many people get excited when they see 'liquidity', but we need to look closely. This time, it’s not like 2020 when the fire hose was wide open; rather, it’s more like using a carefully designed tube for 'precise drip irrigation'.
The key point here is: they are buying short-term Treasury bills, with the aim of providing 'liquidity' to certain specific areas, rather than starting a new round of indiscriminate money printing frenzy. This operation is quite 'twisted'; on one hand, they talk about combating inflation, while on the other hand, they fear that the market might actually run out of money and create problems, walking a tightrope. This signal is very subtle; it doesn’t represent a complete turnaround, but it has indeed loosened the previously tightened valve just a little bit. This bit of liquidity, regardless of whether it's sufficient for the starving risk market, at least offers some hope.
Two, the “immortals fighting” globally: two forces are contending.
What’s even more interesting is that while the Federal Reserve may quietly loosen its grip, on the other side of the earth, Japan may be going in the opposite direction. Interest rates that haven’t moved much for decades there might be lifted a bit. This loosening and tightening are intertwined.
This directly shakes an old game that has been played for many years — “yen carry trade.” Simply put, the good days of borrowing cheap yen to buy various high-yield assets (including BTC and ETH) may be affected. Many traders are anxious, thinking, if Japan really raises interest rates, will they have to quickly sell their assets to pay back the yen? This potential large-scale “repayment” move hangs over the market like a sword, forming a significant backdrop to recent volatility. Global capital is being pulled to choose sides under the tug of these two central banks.
Three, where exactly is the market? The data holds the key.
Looking at the market we are in, $BTC has experienced a “three consecutive declines” on the monthly chart. Such a trend is rare in history, but looking forward, every time it ends, it has been followed by a decent recovery. Although the market sentiment index is still swirling in “panic,” it has crawled out of the deep pit a bit.
What’s more thought-provoking is the fund flow of ETFs. Previously, tens of billions flowed out, causing many to panic, thinking institutions were fleeing. But my view is different; to me, this looks more like washing out those “speculative positions” that relied on leveraged borrowing. What remains now are more “allocation positions” that intend to accompany the market for the long term. After such a jolt, the market’s foundation may actually become more solid. It’s like a house, first asking the guests who are just freeloading to leave, and those who remain are the true homeowners.
Four, “smart money” is voting with its feet.
What really makes me feel there is potential is the actions of those big players against the tide. For example, MicroStrategy, whose floating losses on their holdings are nearing the warning line, not only didn’t sell off but instead increased their position by nearly one billion dollars in BTC. This is not a gambler's mentality; it is a declaration with determination. On the other hand, institutions like BitMine have also quietly increased their positions by billions of dollars in ETH while the market is in despair.
These players are not foolish; the prices they see may be far beyond what is displayed on the screen. Their actions tell me that a decline is not a disaster for them but an opportunity. When most people are driven by panic, a few have already quietly paved the way for the next cycle.
Five, my view: water is the hardest truth.
Having talked so much, let me share my core judgment:
Don't overestimate Japan's influence and underestimate America’s liquidity: short-term volatility is inevitable, but the “anchor” for global asset pricing is still the liquidity of the dollar. Once the Federal Reserve’s rate-cutting cycle is confirmed, that force will be more enduring and fundamental than Japan’s contraction.
Pay attention to the “invisible easing”: There are signs that the Federal Reserve may maintain the market in a more low-key and sustained manner in the future (such as regularly purchasing short-term bonds). This is essentially another form of “supply,” which will provide a slow and steady support to the market.
The rules of the game are changing: domestically in the United States, the power dynamics of currency and finance may be reshaping. In the future, the “fiscal dominance” model, which directly stimulates the economy through fiscal policy, may become more common. In such an environment, assets like digital currencies may be viewed within a whole new value framework.
In short, the market always quietly sprouts when everyone is in despair. Now, even the most conservative traditional wealth management institutions are studying how to allocate some cryptocurrency for their clients. When old-world funds start to seriously consider the doors of the new world, the question is no longer whether change will come, but how fast it will come.
The current situation resembles that famous line from the movie: “Hope is a good thing.” And I believe that liquidity is one of the most important hopes for the market. The sound of the faucet can already be faintly heard.
What do you think? Let’s discuss in the comments section. Follow Long Ge for more first-hand information and precise insights into the cryptocurrency world, becoming your navigation in the crypto space; learning is your greatest wealth#ETH走势分析 #加密市场观察 $ETH
