If the time anchor⚓️ is based on the Bitcoin halving cycle, the Federal Reserve's rate cut cycle should have occurred in Q4 2023.
However, the Biden administration at the time distorted the non-farm data by relaxing the employment of illegal immigrants and expanding the size of government employees, resisting rate cuts. But due to the U.S. Treasury's need to raise funds by issuing a large amount of U.S. bonds to pay for Biden's Keynesian policy, the 10-year U.S. bond yield (the real market interest rate) had a steep downward trend, creating a seasonal bull market spanning Q4 2023 and Q1 2024.
Entering Q2 2024, as the Treasury's debt issuance speed converged and the systemic risk of non-U.S. countries (East Asian housing market + Japanese debt market) erupted, the demand for safe-haven assets was strong, with the U.S. dollar, U.S. bonds, and gold becoming scarce. Combined with the historical tradition of no market performance in Q2, the entire cryptocurrency market entered a period of depression.
By Q3 2024, in order to save the electoral prospects of Biden/Harris, the Federal Reserve initiated a rate cut process, but the 10-year U.S. bond yield strongly rebounded, resulting in the bizarre phenomenon of lowering the nominal interest rate while the real interest rate approached a historical high. Therefore, the market performance in Q4 2024 was not driven by external hot money, but rather a combination of the "Trump trade" and autumn volatility. In fact, it was also since the election of Donald Trump as U.S. President, and the end of the draining of on-chain liquidity after the launch of the Trump-named Meme coin.
By Q1 2025, the main contradiction in the market was no longer the contradiction between non-farm data, CPI, and the Federal Reserve's expectation management, but the contradiction between the White House, the government efficiency department, and the Federal Reserve. The severity of this contradiction, combined with DeepSeek's piercing of the U.S. AI hegemony, even caused a wave of rapid selling of U.S. bonds. This real interest rate decline caused by panic sentiment did not help the spring rally, but instead prompted a large outflow of funds.
Now we face the basic fact that the United States has entered a state of great change unseen in a century, and whether the Musk reform supported by the King of Fools can extend the life of this world empire by 100 years or what will happen if it fails, I dare not imagine.
Faced with such huge systemic risk and the uncertainty of the U.S. cryptocurrency regulatory framework in July, the major players in the cryptocurrency market, trapped in a prisoner's dilemma, choose to be the first to drain the liquidity.
Binance's about-face in shilling its own MEME is this logic, OKX's brazen launch of TRON is also this logic, and a slew of top-tier primary market projects bleeding through meme RON ONG OKX TGEs are also this logic.
The weather is gloomy, not favorable to the great, it is wise to preserve the principal.
