(1) Capital overflow

This graph is very interesting. The cryptocurrency market is a pool of three US dollars. The US dollar overflows from US bonds to US stocks and then to the cryptocurrency market.

(2) Risk and sentiment overflow

This capital overflow process is actually accompanied by the process of risk and sentiment overflow.

US bonds, US stocks and cryptocurrencies are risk-free assets, risky assets and high-risk assets respectively.

Capital, risk and sentiment will gradually overflow from US bonds to US stocks and the cryptocurrency market.

(3) Expectation advance

However, what is more interesting is that most people should have discovered that cryptocurrency traders are more impatient and more sensitive than US stock investors.

The first interest rate cut in mid-2019, the big pie reached its peak, and fell after the interest rate cut. The US stock market rose after the interest rate cut. There are many similar examples.

(4) A set of contradictions

This actually forms a set of contradictions: the contradiction between expectations and funds - expectations are advanced, while funds lag behind.

The result of this contradiction is the bull market. The bull market can reflect the situation where expectations are advanced but funds are not in place. Two major characteristics: one is that the increase is relatively limited, and the other is that there is no copycat season.

Before the funds overflow to the cryptocurrency market, those who bought into the alt market at a higher level (me) may have to go through a tortuous process before the alt market season arrives.

The solution to this contradiction is to only invest heavily in BTC in the early stage, and selectively invest in alt markets in small amounts, and then gradually switch positions to alt markets after funds, risks, and emotions begin to expand to US stocks.