Of course, the focus is still on the "Shanzhai sacrifice" that everyone loves to see.

The general market perception is that a "Shanzhai season" is difficult to generate due to insufficient liquidity, and that is the case, but it is not absolute.

Let's briefly sort out the changes in this cycle. The first is the successful approval of the Bitcoin ETF spot, and the second is Trump taking office.

Many people put the blame on Trump. At least for now, the sluggishness of Shanzhai has something to do with Trump, but it is not the Trump meme sucking away liquidity, which is pure nonsense.

Rather, Trump's tariff behavior has delayed interest rate cuts again and again, which is the main reason.

Trump: I shout for interest rate cuts every day, what else do you want me to do?

Therefore, people in the crypto space can only criticize: You issued meme coins and plundered liquidity!

That's right, Trump also hopes for interest rate cuts.

However, the Federal Reserve has always focused on fighting inflation, and the key is that this premise is based on: the economy is not in recession.

In this way, Trump directly creates an artificial "recession", and then the Federal Reserve conducts emergency QE, and Trump directly transforms himself into "America's savior hero."

This was mentioned in the previous content, so I won't repeat it.

And looking at the data in the past few months, it has to be said that the US economic resilience is indeed strong.

Therefore, people in the crypto space are in a very awkward situation:

Economic recession, the crypto space plunges and washes its face.

The economy is stable, and interest rate cut expectations have declined. Even if interest rates are cut, 50 basis points (the current market expectation for interest rate cuts in 2025) is not enough to trigger a comprehensive Shanzhai season.

For Shanzhai, many people may think like this: Then let it be a recession, at least a recession will lead to emergency and substantial interest rate cuts to save the market. However, in reality, the US economy does not seem to be so fragile.

I think this has a lot to do with the enterprise subsidy bills previously introduced by the Biden administration, which further highlights the lag of policies.

All of the above is as if everyone is prepared to perish together and start anew, and the other party says: We are not fighting.

In addition to whether or not interest rates are cut, another factor troubling the crypto space is the approval of Bitcoin ETFs. Some people think: Isn't this a good thing?

Yes, it's a good thing for Bitcoin. It's a little unfriendly to Shanzhai.

One of the inducements in the Shanzhai season is: Bitcoin funds rotate to Shanzhai.

And the current situation is: the relatively free liquidity was originally locked by the Bitcoin ETF.

Here's an example for easy understanding: You have cash and can't help but spend it everywhere (buying Shanzhai). Then, you deposit the cash in the bank (buying BTC through ETF). When you want to spend it (selling BTC), you have to withdraw it, which feels "troublesome" (cannot be bought and sold 24 hours a day), and the desire to spend may be gone when you withdraw it.

Therefore, a polarization between Bitcoin and Shanzhai has emerged. Coupled with too many external uncertainties and various FUD noises, it is indeed safer for everyone to put funds on BTC.

I think this point has a greater impact on the crypto space and Shanzhai than macro impacts. Personally, without ETFs, relying solely on the existing funds in the crypto space would not have caused Shanzhai to fall so badly overall.

So is this a completely bad thing? In the long run, Bitcoin being known and held by more people is by no means a bad thing for the crypto space, and the same is true for Shanzhai.

This point can be viewed from the perspective of capital main forces and exchanges regarding the Shanzhai season, because they, like retail investors, need the Shanzhai season to make bigger harvests.

Let's first assume a situation: In the case of continuous depletion of liquidity in the crypto space, can the existing funds in the space trigger a Shanzhai season?

The answer is: Absolutely can, but it depends on whether they want to.

: Saying it is as good as not saying it!

No, no, no, listen to me first!

Why can it? Based on the current liquidity of Shanzhai, it is not difficult for exchanges to unite with main forces and pull them up in turns. Pull up a western wall, dismantle the western wall to repair the eastern wall, establish the eastern wall, kick the eastern wall and pull the northern wall. That's right, it's taking turns.

The key question is, which is what many people say: What are they plotting? Is it to help the retail investors get out of the trap? Helping the retail investors get out of the trap is a wrong view. In fact, retail investors lose more money when prices rise than when prices fall, which will not be discussed too much. As for what they are plotting, this is the key. Yes, what are they plotting?
The above only illustrates that pulling up the market can happen anytime, anywhere. In extreme cases, it will not consider any external factors at all. But this kind of pulling up does not have sustainability and universality, and can be said to be: putting on a bold front.

So under what circumstances would the main force and the exchange do this?

The answer is nothing more than: in the case of choosing to maintain the cycle's regularity. The reason is also very simple. As mentioned many times in previous updates, if the cycle fails, the market will lose more fresh newcomers. Of course, whether or not to maintain the cycle is a matter of opinion and does not warrant debate.

Looking at the current situation, there is still half a year before the end of 2025, and the expectation of interest rate cuts in 2025 is still there. According to the dot plot in March, it is 50 basis points, but the market pricing in May reduced the probability of an interest rate cut in September from 78% priced in March to 45%.

As mentioned earlier, these data have something to do with the lagged effects of the Biden administration's policies, which are difficult to sustain. The later the interest rate cut is postponed, the greater the stamina (all the water is held back, it will be released sooner or later).

Here comes another key point: the main force faces 3 choices.

1. Cater to the macro, regardless of the cycle. When liquidity is sufficient, when to start the market, the strength of the market depends on the macro economy.

2. Prioritize maintaining the cycle. Replicating 2017, a comprehensive bull market in the balance sheet reduction cycle. Regardless of macroeconomics. This situation, as mentioned earlier, is like robbing Peter to pay Paul, not sustainable and without universality, which will affect sentiment to some extent.

3. The middle way. Macroeconomics provides an opportunity, such as a small interest rate cut, or some policy benefits, such as the passage of Ethereum's ETF staking, and then Ethereum leads Shanzhai to retaliatory gains. In this case, the emotions of the new investors are also easily ignited. This situation is the most ideal.

Of course, seemingly three situations, but in fact only one key point: whether or not to maintain the cycle.

All the above opinions are not investment advice.

The only advice is to seek stability, with Bitcoin always being the first choice. Avoid contracts and frequent short-term trades.

After all, what you consider when doing Shanzhai is nothing more than a profit-loss ratio, not 50% vs 50%, but using the risk of losing 1 portion of the principal to gamble for a return of ten or a hundred portions of the principal. Then the profit-loss probability is also relatively equal.

Ps: Similarly, what many people see before entering the market is: hundreds of times the return. What they see after floating losses is: losing 1 portion of the principal. This emotional gap is painful, right?