I feel that a financial crisis is about to come, or that a financial crisis in the United States is coming. This country, which has severed trade with China, may be heading towards a dangerous situation. Global assets are undergoing a major reassessment, and amidst this grand narrative, some small details may be overlooked, which explains why recent US stocks and dollar-denominated assets like cryptocurrencies are in a depression and may continue to be depressed. Starting with the US President and the Federal Reserve, the US is currently raising tariffs aimed at trade repatriation while artificially creating a domestic recession, intending to force the Federal Reserve to cut interest rates. I am very willing for participants in the crypto space to do so, but this method is clearly wrong.
Short-term US Treasury bonds, long-term US Treasury bonds, and stocks form three investment targets: short-term US Treasury bonds (high liquidity), long-term US Treasury bonds (high liquidity), and US stocks (low liquidity). This is the healthy balance sheet of all developed countries. Now let’s see what has happened. After confirming the repatriation of manufacturing, raising tariffs, and forcing the Federal Reserve to cut interest rates, what has happened? The most intuitive manifestation of forcing manufacturing to return through tariff increases is the change from a trade deficit to a trade surplus. However, the US dollar is a global reserve currency, and this characteristic means it must result in a trade deficit. If it is forcibly distorted, it requires the selling of US dollar assets, the most intuitive being US Treasury bonds. At the same time, Trump has already caused a phenomenon of recession in the US. For investors, the logic of not daring to invest in stocks and long-term bonds is that stocks are affected by the economy, while long-term bonds are affected by expectations, prompting investors to actively and passively sell. Short-term bonds may also face a sell-off, and when the market is selling US dollar assets, it will cause extreme liquidity scarcity.
At this time, what does a rate cut mean? It means a complete abandonment of US Treasury bonds, which is not possible. This situation will continue and worsen, and the crypto space, as the most peripheral asset, will continue to be impacted by liquidity shocks.
This is the reason why the recent financial whales of the consortium are frantically cutting losses, not because they are cutting losses at the bottom but because they need to escape. BTC ETH XRP#加密市场反弹 #CPI数据来袭 #币安投票下币 $BTC $ETH $XRP
