Today is March 10, 2025. After experiencing Trump's establishment of the U.S. government's Bitcoin strategic reserve, I would like to share my thoughts. Shortly after taking office in early February, Trump imposed tariffs on two neighbors, Canada and Mexico. Following that, the Nasdaq, Bitcoin, the dollar, and various global assets entered a continuous decline. According to my previous analysis, Bitcoin has merely become a leveraged tech stock of the Nasdaq. This has indeed been the case over the past half month. So rather than simply guessing Bitcoin's rise and fall by looking at the charts, why not speculate on what Trump intends to do? As the saying goes, a gentleman discusses actions, not intentions. Rather than speculating on what Trump wants to do, it’s better to first look at what he has already done. Imposing tariffs, having Musk form DOGE to cut jobs and reduce government spending, cutting subsidies for the poor, halting aid to Ukraine, and threatening Powell to lower interest rates quickly. Let me directly give my conclusion: the earlier actions are all paving the way for the last one, which is that Trump's goal is to force the Federal Reserve to lower interest rates. The Federal Reserve is an independent institution, and the president cannot simply fire Powell. Last September, November, and December, during the three months of Democratic governance, interest rates were lowered three times. Did Trump not lower them upon taking office? Trump is a businessman and wants manufacturing to return to the U.S. and to have a trade surplus with other countries, which requires a depreciated dollar and a low-interest environment. Lowering interest rates is Trump's most urgent need. So what if Powell is stubborn and refuses to lower rates? Then a small recession is artificially created to force Powell to lower rates. Job cuts and reducing government spending, along with cutting subsidies for the poor, will quickly cool down the economy. Meanwhile, the tariff stick seems to be swinging continuously but has not really come down. In February, it was said to be postponed to March, and in March postponed to April. In fact, the tariff stick has not come down but has already played its role; the U.S. stock market is like a startled bird, continuously declining, seemingly on the verge of collapse. Historically, after the U.S. stock market declines for two consecutive months, the CPI will rapidly decrease. This is due to the illusion of stocks: when the stocks people hold keep rising, they mistakenly believe they are wealthy and tend to consume more. Conversely, when the stocks keep falling, people feel they are becoming poor and do not consume. Last week's non-farm payrolls and unemployment figures both fell short of expectations, which has already proven this point. I believe that U.S. inflation will rapidly decline from here, and Powell will emerge to say how well he controls inflation, then start to adopt dovish measures to save the market, and possibly lower rates for the first time this year in May or June. Bitcoin will first touch the bottom before rebounding ahead of the Nasdaq, and it will reach a peak by the end of this year or early next year.
