Source: Hua Li Hua Wai
Although we have written quite a bit about market trends and Bitcoin topics recently, we can still see some interesting comments in the background. Here, I will select two representative types:
- Following the public account to read your articles is to give you face, yet the article even sets a WeChat bean?
- I often see news reports that many people are liquidated because of Bitcoin; Bitcoin is just a virtual currency, a tulip bubble. Are all the people in your circle just gamblers?
Because these two types of questions seem quite interesting, I will briefly respond publicly:
First, let’s address the issue of WeChat beans.
I can only say that regarding face, I don't know you; is your face really that important? And to be honest, if you are not strong enough, then no one in this world will care about your so-called face.
Moreover, 'Hua Li Hua Wai' has published 519 articles through the public account, all of which are publicly available and free. Additionally, we have a WeChat bean column that only has 5 articles so far, and due to some special considerations, we have only symbolically set a redemption threshold of 2.1 yuan (21 WeChat beans). As shown in the figure below. If, after successfully enjoying 519 articles for free, you become emotionally dissatisfied because of the 5 articles and feel your face is losing face, then please take care of your face and maybe it's better for you to unfollow us soon.
Next, let's address the issues related to Bitcoin.
In any field, there are gamblers; it's just a matter of more or less. Of course, you can consider that everyone except yourself is a gambler; that's your freedom. Regarding Bitcoin, if you believe that Bitcoin is just a virtual currency and perhaps just a very expensive form of 'WeChat beans' in your eyes, I won't oppose your viewpoint because everyone has the right to maintain their own views and opinions. You can certainly think of Bitcoin as a tulip bubble; we won't argue with you about that.
For those who still hold such thoughts or views, our suggestion is:
- It doesn't matter what your views are; you can freely share your opinions within the legal boundaries, but don't casually try to engage others in a debate with your views.
- Block all news or information related to Bitcoin, and try to keep your eyes off it.
Many times, people often harbor dissatisfaction towards certain things, but ultimately, it might be more about their own misses or failure to become vested interests. For example, if you had spent $1,000 to buy 100 Bitcoins in 2012 and successfully held onto them until now, seeing $10 million in your account, you probably wouldn't be saying that Bitcoin is a tulip scam anymore.
Having discussed these two interesting types of questions, let's continue the topic of Bitcoin.
If we extend the time dimension, we can clearly see that from January 2023 to now, Bitcoin is generally on an upward trend. As shown in the figure below.
Or to put it bluntly, if during any time from January 2023 to October 2024 you bought Bitcoin with your eyes closed, ignoring the fluctuations in between and successfully held onto it until November 2024, from an overall return perspective, you wouldn’t have lost money.
But the reality is that in the past two years, we have always seen people giving various reasons for whether to buy or sell, and many people still hope to buy at the lowest point and sell at the highest point, hoping to accumulate wealth in a short time. In the end, after all the back and forth, they find that not only did they not make money, but some even lost some principal.
In fact, since Bitcoin was approved for a spot ETF earlier this year, although Bitcoin still experiences considerable price volatility, compared to previous bull market cycles, this cycle has already begun to appear relatively less risky. We can also consider that from this cycle onward, Bitcoin will officially enter a 'low-risk' asset cycle.
Additionally, if we simply compare it with the historical development of gold, we could even argue that BTC ETF is the most successful financial product in history.
As for those who still believe that Bitcoin is a tulip bubble or a Ponzi scheme, we can only say that you might as well directly say that the U.S. government is a scam because the approval of the ETF requires government approval. Since the BTC ETF can be approved by the U.S. government, isn't that equivalent to the government allowing a tulip scam or Ponzi scheme?
Clearly, so far, this viewpoint seems unsustainable, and more so, it is just a kind of 'revenge' psychology from opportunity losers. Or let’s put it in simpler terms: have you ever seen a tulip bubble that lasted for 15 years (the Bitcoin white paper was published on October 31, 2008, and Satoshi Nakamoto mined the first block of Bitcoin on January 3, 2009)?
Here's another interesting data point: according to 99bitcoins, in the past decade, Bitcoin has been declared dead 477 times. As shown in the figure below.
However, this so-called 'death report' and tulip bubble rhetoric has not stopped Bitcoin's price from rising more than 1.52 million times. As shown in the figure below.
Also, don’t forget that the BTC ETF has been officially approved for less than a year, and as institutions continue to adopt it further (some countries/regions may also include BTC in their strategic reserves), Bitcoin's entry into a 'new phase' of development has only just begun. What you once disregarded as 1 Bitcoin today may feel unaffordable, and in the future, you may only be able to look up to it.
Of course, the future seems bright, but the process is often tortuous, and from a longer time perspective, we may continue to experience one cycle after another (bull markets and bear markets).
Let’s not talk about the distant future; let’s just talk about next year:
Many people seem to be filled with anticipation for the upcoming year 2025, hoping Bitcoin will reach new highs again and that there will be a comprehensive altcoin season explosion in 2025... In previous market topic articles from Hua Li Hua Wai, we have discussed some macro factors that may be favorable for the market next year. Next, we will continue to talk about potential macroeconomic risks next year, as opportunities and risks coexist.
1. The pace of interest rate cuts by the Federal Reserve may slow down
Regarding the expectation of interest rate cuts by the Federal Reserve next year, we have actually discussed this in some detail in articles a few days ago. In the meeting that concluded last week (Beijing time, December 19), the Federal Reserve announced a reduction of the federal funds rate target range by 25 basis points to between 4.25% and 4.50%, and it is expected that the extent of rate cuts may narrow to 50 basis points by 2025.
The announcement of this news directly led to a rapid decline in the market (including the U.S. stock market and the crypto market). Currently, more and more people are considering the expectation of the Federal Reserve's interest rate cuts as an important measure of market trends, and a slowdown in rate cuts is certainly not good news for the market.
2. Trump may continue the tariff war after taking office
Recently, we have seen some signs through media reports, such as the possibility that the U.S. may impose a 100% tariff on BRICS countries next year. Once the trade war restarts, it will definitely impact GDP to some extent, thereby hindering economic development. As shown in the figure below.
3. NVDA's earnings may fall short of expectations
As an important representative of U.S. tech stocks, NVDA contributed a return rate of 20% to the S&P 500 index just last year. After they announced their third-quarter financial report data on November 20, although the data still exceeded expectations (with third-quarter revenue of $35.1 billion, surpassing the market analysts' average expectation of $33.2 billion, and a net profit of $19.31 billion, exceeding the market expectation of $17.45 billion), the market's reaction seemed not very strong.
Looking at this trend, the market seems to have higher expectations for NVDA, which undoubtedly increases market volatility factors for next year.
4. Inflation in the U.S. remains a major issue
According to the current development situation, after Trump officially takes office next year, the U.S. is likely to further intensify or stimulate economic development, such as the recovery growth of the manufacturing sector and boosting the oil and gas industry. According to some economists' forecasts, U.S. GDP growth is expected to remain around 3.0% and may accelerate in 2025.
However, this growth rate theoretically occurs when inflation begins to rebound and monetary policy loosens. In other words, the issue of inflation remains a major problem that the U.S. (and globally) will face next year, and this problem seems to be becoming increasingly evident. At the same time, the issue of inflation further influences the interest rate hike/cut policies of the Federal Reserve mentioned above.
5. U.S. 10-year Treasury yields continue to rise
On a side note, regarding domestic wealth management products, I wonder if anyone has noticed that some of these low-risk products have recently seen an increase in yields; products that used to yield around 2% annually have now risen to 3% or even higher. A long-term investment I bought at a certain bank recently even soared to over 4%. I haven't seen a 'low-risk' product starting with 4 for a long time. As shown in the figure below.
This is mainly because the rise in government bonds has driven the increase in low-risk wealth management products, as many low-risk wealth management products primarily invest in various debt assets. As for the reasons for the rise in government bonds, there are generally two: first, there are reports indicating that the policy interest rate is expected to be lowered by 40–50bp next year; second, given our current situation in the A-share market, many funds are likely to return to the bond market for safety. Under these dual influences, it has directly driven the rise of the bond market. Looking at the current situation, as long as the A-share market does not experience a bull market like a few months ago (in September), then it will naturally be favorable for the bond market. As shown in the figure below.
As for the relationship between government bond yields and the rise and fall of wealth management products, we actually wrote an article on this topic earlier (in 2022), and interested friends can search for historical articles to review. However, the performance of government bonds is just one aspect; our main concern for next year remains a possible deflation issue, but the topic is quite sensitive domestically, so we won't discuss it further. Let's continue talking about the U.S.
Since the Fed's policy shift this month, U.S. 10-year Treasury yields have continued to rise. Based on the current trend, they may reach 5% by the second quarter of next year, which would be bearish for the market. As shown in the figure below.
Of course, the five aspects we listed above are more macro in nature, and when combined with various other factors and news, we can only say that 2025 is both a year full of opportunities and accompanied by greater market volatility risks. Always remember the phrase from our previous articles: managing your positions strictly is more important than surviving short term; investing is a long-term, comprehensive practice.
