Source: Huali Huawai
In yesterday's (March 11) article, when we discussed the topic of Trump, we mentioned a 'debt' issue. Some friends left comments in the background saying they couldn’t understand it, so here we will make a simple expansion on this topic from the previous article.
First, let's take a simple look at the scale of U.S. debt data:
Due to the high scale of the U.S. government's debt. According to media reports, as of December 2024, the U.S. government's debt scale has exceeded $36 trillion, with nearly $3 trillion in U.S. Treasuries maturing this year.
Secondly, let's take a look at the U.S. 10-year Treasury yield:
Currently, the U.S. 10-year Treasury yield has dropped to 4.27%, as shown in the figure below. Coupled with the recent trends in U.S. stocks, in simple terms, the synchronous decline of Treasury yields and the stock market often indicates that market sentiment is not good, and investors' concerns about the economic outlook are continuing to intensify.
The main reasons for the recent violent fluctuations in the market are Trump's tariff policies and the various uncertainties surrounding Trump, which have triggered market risk aversion.
If we consider the debt issue and U.S. Treasury yields comprehensively, we will discover an interesting phenomenon: the increase in global risk aversion will somewhat raise the demand for U.S. Treasuries, leading to a decline in Treasury yields (which corresponds to an increase in Treasury prices). The decline in interest rates is obviously beneficial for the current situation of the U.S. government, as it can roll over its debt at more favorable rates (i.e., issuing new debt to repay old debt).
In simple terms (speculation), it seems that after Trump took office, he does not like the currently high 10-year bond yields, because the interest rates paid by the U.S. government during debt rollovers are usually closely related to market rates, meaning that when Treasury yields decline, the U.S. government can issue new debt at lower rates, thereby continuing to lower future debt interest costs.
The above logic can be expressed in plain language: Trump hopes for a market 'crash' to force bond prices to rebound (note: a sharp drop in the stock market can directly lead to volatility in the financial market, but after short-term pain, it will still continue to form a long-term situation favorable to the U.S. government), thereby lowering bond yields and facilitating cheaper government refinancing. Therefore, after Trump took office, he initiated a series of actions, including tariffs and layoffs (the government efficiency department led by Musk is currently doing this). At the same time, the resulting economic recession dilemma will also force the Federal Reserve to take direct action, as lower bond yields not only benefit the government for refinancing but may also prompt the Fed to cut interest rates quickly.
Therefore, in the previous article, we said: If Trump wants to quickly become a great U.S. president, the simplest way seems to be 'printing money' to make the dollar great again, and the simplest path to achieving this currently seems to be manipulating 'debt.'
Of course, all of the above are still a kind of fantasy and speculation on our part. As for what Trump really thinks and what the U.S. government's plans are, only Trump knows. And regarding how the Federal Reserve will respond to the market's violent fluctuations, whether it will cut interest rates again in June this year, these questions await continued observation, and we can only take it one step at a time.
Next, let's return to the topic of the crypto market and continue our discussion.
Since the beginning of this cycle, especially with the official approval of ETFs, more and more institutions are deeply participating in the crypto market, and some institutions (projects) in the crypto market are also establishing closer ties with the traditional market.
Many people say that the current crypto market is increasingly resembling the U.S. stock market. I tend to agree with this statement, as the upcoming crypto cycle is likely to be more consistent with macro trends, unlike the previous two bull market cycles that had their own timing.
I remember mentioning in some earlier articles that this bull market (in 2024-2025) could be the last big opportunity for ordinary people. For example, in a December 2023 article, we mentioned that the next bull market (i.e., this bull market) might be the last chance for large-scale growth in the crypto market. At that time, our rationale and expectations were primarily based on regulations (policies) and institutional participation. As shown in the figure below.
In other words, as we move forward, with more traditional institutions and state-owned enterprises entering the market, the crypto market will become increasingly 'regulated.' This seems unfriendly to most ordinary people who hope to get rich overnight or speculate, implying that in the future, we may (this is just a possibility and speculation; nobody can predict the future) rarely see extreme booms or busts. If the conditions for 'transformation' are met (see the topic of transformation in the article from January 17), it may even gradually trend towards a new trend similar to a slow bull market like the U.S. stock market. Of course, in this long-term development process, I believe that at least over 90% of the current vast projects will die or go to zero, which is also a necessary path for the development of things.
If we discuss according to narratives, so far, among the hundreds of different narratives in the crypto market, it seems that only a few narratives such as DeFi (which we mentioned in previous articles about DeFi 3.0), RWA, and Stablecoin have made relative breakthroughs in adoption (including going mainstream), while many others remain purely speculative or even purely air-like (this is mainly based on the perspective of industry development; in fact, speculation and air do not prevent people from making money in the crypto field, and we need to view any issue dialectically).
In the first article at the beginning of this year (2025), we mentioned: Starting this year may signify that the crypto field will welcome or begin to enter a new era, where some events or things that disrupt our current perceptions may occur, and each of us will become participants and witnesses.
To briefly review, in the past 100 days or so, we have indeed seen many things that have disrupted our original expectations or perceptions, such as: Xiaohongshu becoming a refuge for TikTok refugees, the U.S. president surprisingly stepping down to issue coins with his wife, Deepseek unexpectedly igniting a new wave of AI development and impacting global computing power, the White House hosting a crypto summit, the U.S. Bitcoin strategic reserve (although currently only at the executive order stage), the occurrence of the largest hacking incident in history (Bybit being hacked for $1.5 billion), and Trump's tariff war unexpectedly reopening... etc.
Looking back, it seems that with the start of this cycle, investment logic is also slowly changing. Those pure speculations are beginning to shift towards focusing on things or targets that can sustainably create value. From a certain perspective, this is also a sign that the crypto market is becoming more mature. Although speculation will always exist in every financial market, many speculative theories in the past (including valuation methods for altcoins) may be undergoing some subtle changes. For instance, when various speculative narratives are repeatedly utilized and hyped, and when people are generally tired of PvP games (including scam games), the original effective ways of playing may lose their effectiveness unless the market can create a larger (several times larger than before) scale of FOMO factors.
In short, the wild (or barbaric) era of the crypto market will eventually pass. The days when one could easily achieve over 10 times returns by blindly buying altcoins during the so-called bull market are slowly disappearing. The market will continue to retain the characteristics of crypto (Crypto), but it seems to be slowly evolving into a transitional phase similar to traditional financial markets, with liquidity continuously flowing from those without much investment skills to those who are technically savvy (people/institutions). However, in the long run, this is a positive manifestation for the development of the crypto industry.
Often, the end of a phase story also signifies the beginning of a new phase. We just need to grasp the present, look to the future, and continue to be patient.