Source: Talking about Li, Talking about the Outside
According to a research report from The Kobeissi Letter, the long-term inflation expectations in the United States have surged to 4.1%, the highest level since 1993. The tariff policy since Trump's administration is a major contributor to this issue, as there has been a trade deficit of over $300 billion in just two months, severely impacting consumer confidence. Besides the long-term inflation expectations, the one-year inflation expectation has also skyrocketed from 2.6% to 5.0%, doubling in less than three months, which will inevitably have a relatively negative emotional impact on the investment market, as shown in the diagram below.
In this large environment, the decline of U.S. stocks is actually understandable, and the resulting drop in the crypto market will be even larger. Meanwhile, gold continues to rise and break historical new highs. It seems that smart large funds are starting to make choices with actual actions. In just the past two months, the inflow size of gold ETFs has reached $12 billion. As shown in the diagram below. Since the beginning of this year, the S&P 500 has fallen nearly 5%, while gold prices have risen nearly 17%. Does this reveal an atmosphere of economic slowdown?
Let's return to the crypto market.
In the past two years, Bitcoin, which has been touted as digital gold, does not seem to have exhibited the same attributes as gold. Since the beginning of this year, Bitcoin's price has also fallen by 30%, leading many to turn bearish on the crypto market, believing there is little hope left in this market.
However, compared to the current situation of Bitcoin, it seems to be better than any historical period, as it has transformed from a so-called tulip scam into a national strategic reserve asset of the United States. At the same time, an increasing number of large institutions are beginning to adopt Bitcoin, which means that Bitcoin's image is slowly undergoing some qualitative changes.
In the short to medium term, Bitcoin still cannot become true gold (the attributes of digital gold). Compared to gold, it cannot serve as a mature hedging tool for large funds. Its price will still be subject to significant fluctuations caused by speculative factors. Currently, Bitcoin appears more like a tech stock. However, in the long run, we believe Bitcoin will eventually become a global asset and serve as an effective financial tool on various balance sheets; it seems to be just a matter of time.
However, in this round of cycles, although a new bull market theoretically seems to have begun in 2023 (2023–2025), if we continue to look through some indicator experiences, it seems that we have not yet experienced what we call a theoretical bull market (or crazy bull market), as shown in the diagram below.
There may be two possibilities here:
Firstly, the crypto market no longer follows some indicators and rules of historical cycles.
Secondly, the crypto market has not yet truly welcomed the so-called bull market in theory.
So, which of these two scenarios do you personally lean towards?
Here we do not provide specific answers, as this question does not have a standard answer. Different people have different opinions.
In recent articles from Talking about Li, Talking about the Outside, we have mentioned Trump quite frequently because his every move has a direct impact on market trends. For example:
Last year, Trump's friendly commitments to crypto contributed to Bitcoin breaking the historical threshold of $100,000, while this year, Trump's tariff policy has led to continuous pullbacks in Bitcoin, and the U.S. Bitcoin strategic reserves, which the market had high hopes for, have merely become composed of confiscated assets.
On one hand, various policies since Trump's inauguration have caused the market to plummet, while on the other hand, WLFI (World Liberty Financial, a Trump family project) continues to accumulate some crypto assets (including ETH, etc.). Recently, they even announced plans to launch a new dollar stablecoin, USD1, which has created a rather strange and interesting phenomenon.
In the current overall market environment, it seems that the catalysts for the crypto market need to rely more on external environmental factors (in the absence of internal innovation), that is, if the market wants to rise again, it mainly hopes for three points:
Firstly, Trump's tariff policy could end within a few months.
Secondly, the Federal Reserve may adopt a new quantitative easing (QE) policy to stimulate the market (i.e., providing more liquidity conditions, causing some liquidity to spill over into the crypto market).
Thirdly, global net liquidity continues to increase (although the dollar is still king, the increase in net liquidity from the EU, China, and Japan will also contribute to the rise in prices of high-risk assets like Bitcoin).
But these major points do not seem to be so clear at the moment; the market may still need some time to wait and digest.
Here, let's make a hypothetical assumption (note that this is only a hypothesis). If we look solely at the macro Global M2 indicator, because this indicator has had a lag of about 70 days in relation to Bitcoin's trend for some time, for example, if Global M2 reaches a peak of $108 trillion on September 23, 2024, Bitcoin may reach a peak of $108,000 on December 17, 2024.
Therefore, theoretically speaking: on March 24, 2025, Global M2 may reach a peak of $109 trillion. If there are no new, larger black swan events affecting the market, Bitcoin may rebound to a peak in June 2025 (just a peak, not necessarily breaking the historical high).
Of course, you can directly deny the above assumption. Since it is an assumption, it could be right or wrong. There is no need to continue debating this; we are merely providing a possible line of thought, not as any investment guidance.
Currently, there are many views and voices online. I have recently been occasionally following the comments and sentiments of some KOLs on CT (Crypto Twitter) and have found:
Most KOLs seem to be bearish, and most of these KOLs have also successfully escaped at high points, which I do admire.
Some KOLs also believe that the bull market has not yet begun, and that $100,000 for Bitcoin is merely a new starting point, with the price continuing to reach new highs by the end of the year, potentially hitting $150,000.
Some people also believe that a new round of rising market may occur in the second quarter of this year... and so on.
However, everyone has different thoughts or views, and the corresponding strategies taken will also vary. What others say or do is not very important; what matters is what you will do. Do you have different coping strategies?
For my part, although I sold 10% of my Bitcoin last December, strictly speaking, I am still in a state of actively hoarding coins, once again 'enjoying' the profit pullback. Fortunately, I have experienced this many times before; the current market sentiment has not brought me any new anxiety.
Because funds are always fluid, the financial market never lacks hot topics. I have noticed that many people have recently gone back to studying gold, U.S. stocks, Hong Kong stocks, etc. I have not participated in these, not only due to a lack of time and energy but I also choose to remain focused in the crypto field and continue to refine myself.
This morning, I happened to see a text shared by a partner in the group that resonates with my current mindset:
Tomorrow (April 2) is a special day that Trump has been hinting at recently. The president may announce an average increase of over 15% in retaliatory tariffs on imported products from about 25 countries. Combined with some important economic-related data from the U.S. that will be released this week, we may continue to see significant market fluctuations in the coming days. If you don’t know what to do at this time, the best course of action is to do nothing.
It is precisely because of Trump's potential retaliatory tariff measures that Goldman Sachs has significantly raised its inflation expectations for the U.S. and lowered its GDP growth expectations. Goldman Sachs also predicts that the Federal Reserve will cut interest rates three times in 2025 (in July, September, and November), ultimately keeping the federal funds rate forecast at 3.50–3.75%.
Although institutions such as Goldman Sachs have provided new expectation reports, on one hand, there are high inflation expectations, and on the other hand, there are expectations of interest rate cuts, which undoubtedly adds more new uncertainties to the market.
Let's look at another data point: as of now, the average tariff rate in the U.S. has reached around 8%, the highest level since 1970. If the U.S. tariff war continues to escalate this week, we may also see new retaliatory policies from some countries, and it could even evolve into a global large-scale trade war. In other words, this month (April), we may witness the average tariff rate in the U.S. breaking the record set in 1946. As shown in the diagram below.
Additionally, as for Trump, who likes to create chaos, it seems that just having a tariff war is not enough. He has also been frequently engaging in other provocative actions lately. For instance, Trump stated yesterday (March 30) that if Iran does not reach an agreement with the U.S., it will face bombing. As shown in the diagram below.
The tariff war + military threats seem to have become Trump's signature moves, and the impacts of these events affect not only the crypto and stock markets but will also, to some extent, impact the global economy and situation.
Today (April 1) is April Fool's Day, and tomorrow is what Trump calls America's Liberation Day (April 2), and will April bring a new beginning or a new ending for the market's overall trend?
Let's leave the answer to time.
As ordinary investors, we seem unable to change the big picture; the only thing we can change is our own positions (protecting our positions and patiently waiting for new opportunities to profit).