Recently, I talked with several old friends who have a high understanding of the world and who are within my ability to contact about the surge in GME GameStop, Bitcoin, and the altcoins in the cryptocurrency circle, and refreshed my understanding. I will summarize and synchronize the new understandings for everyone as soon as possible:

1. The Federal Reserve and the Treasury Department have a very strong ability to accurately control how much water there is and where the water flows.

1.1 Specifically, under the framework of quantitative easing and quantitative tightening, in conjunction with the adjustment of interest rates of various accounts such as ON RRP, TGA, and BTFP, the water flows to basically achieve free control

1.2 In the past few years, the US macroeconomic policy emphasis has gradually strengthened its ability to control. For the world's largest economy, which has always been a strong believer in the market economy, it is actually somewhat ironic.

1.3 Of course, it also has a lot to do with the party. The Democratic Party itself likes the Keynesian school and likes strong economic regulation; on the contrary, the Republican Party likes a small government and a pure free market economy.

2. Under the current macroeconomic regulation framework system of quantitative easing and tightening, the idea of ​​judging the increase or decrease of market liquidity only by interest rate hikes and cuts is completely outdated.

2.1 Originally, the QE and QT cycles were particularly obvious. In the past two years, although the federal funds rate has been raised to a high of 5.35% after a violent interest rate hike, US dollar-priced assets have continued to hit historical highs.

2.2 Especially from June 2023 to now, the liquidity has not decreased but increased in the past year or so, which is a very classic example (see the figure below for the reason, the specific explanation has been discussed in the previous article "The History, Present and Future of Quantitative Easing and Tightening" and will not be repeated here)

2.3 Therefore, to judge the trend of risky assets, we still have to trace the source, and look at the bottom. We still have to look at the actual trend of liquidity and the expectation of the trend of liquidity.

3. Bitcoin is the canary of risky assets priced in US dollars.

3.1 The trend of Bitcoin is now a type of asset that US stock fund managers must study, although these people may not buy BTC or think that BTC is digital gold

3.2 Let's look at a phenomenon in recent years (see the figure below):

3.2.1 Escape the top (see the green column dividing line in the figure below): BTC will peak first and start to fall from a high position, followed by the Nasdaq, and liquidity will peak last (the three peaked within 4 weeks)

3.2.2 Bottom-fishing (see the red column dividing line in the figure below): BTC will fall to the bottom first, then the Nasdaq will bottom out, and then liquidity will bottom out (the three bottom out within 3 weeks)

3.3 Reason: Liquidity can be predicted relatively accurately by relatively professional institutions, so BTC itself is more sensitive as a riskier risk asset, so it will peak, plummet and bottom out before other risk assets (that is why Bitcoin has now become the "canary of dollar-priced risk assets")

4. About GME GameStop and altcoins

4.1 GME and altcoins are the gathering places for real retail funds

4.2 The amount of money in the hands of retail investors is highly positively correlated with interest rate hikes and cuts

Although under the strong liquidity control framework of QEQT, interest rate cuts may not immediately make macro liquidity take off. But in a high-interest environment, retail investors are definitely out of money; conversely, only in a low-interest environment, when borrowing money is cheap enough, retail investors will have money

4.3 In essence, meme stocks like GME are essentially hyping stocks with expectations of more or less money in the hands of retail investors.

The recent surge in GME is largely due to the expectation that retail investors will have more money soon. So I started to predict your prediction. Although there has been no interest rate cut, such stocks have begun to run away.

4.4 The rise and fall of Bitcoin is a weather vane for liquidity in the hands of institutions, and GME and altcoins are weather vanes for liquidity in the hands of retail investors.

4.5 If the altcoins in the currency circle want to save themselves, they need the right time, the right place, and the right people:

4.5.1 Right time: wait for the wind to come, wait for the interest rate cut to increase the money in the hands of retail investors

4.5.2 Right place: after Trump wins the election, replace the chairman of the SEC who is friendly to cryptocurrencies

4.5.3 Right people: try to make something as earth-shattering as the ICO in 1617 and Defi in 2021

5. Conclusion: Coin holders encourage each other

5.1 What money can you make by buying Bitcoin

5.1.1 Make money from the world's entropy increase: We are in an era where the existing order is gradually loosening, which means the world will become more and more chaotic. Then under the framework of quantitative easing, as long as you print money mindlessly, you can solve the problem in a short period of time. In the end, the over-issuance of currency on the earth will only become more and more serious, so safe-haven assets such as gold will only increase in price in the long run.

5.1.2 Make money from Bitcoin to become digital gold:

In the last bull market, Bitcoin reached its highest point of 69,000 in November 2021, and the highest point of Bitcoin market value/gold market value reached 11%.The ratio is now 8%, and it is still early in the game.

5.2 Who will you sell the big pie in your hand to in the end?

You can do swing trading in the short term, sell coins when the bull market ends, and buy coins when the bear market falls almost.

But in the long run, I hope you can have a bigger picture. If you don’t sell the coins in your hands to various governments and central banks, then our battle as coin holders will not end.

If you want to know more about the relevant knowledge of the currency circle and first-hand cutting-edge information, pay attention to Tianmeng. Junyangli publishes market analysis and recommends high-quality potential coins every day.

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