What is the future trend of US dollar liquidity? When will Bitcoin see another unilateral rise?
1. In the next three months or so, the macro level does not support a unilateral big market, and it will mainly fluctuate
2. The big market is expected to start around October this year
Prospects for the next three months or so
When the US dollar liquidity fluctuates in a narrow range around the high level of 6 trillion US dollars to 6.5 trillion US dollars, it does not support a unilateral big market for risky assets including Bitcoin. The pattern cannot be large, and there is a high probability of ups and downs.
The rise and fall of Bitcoin is essentially only related to the amount of funds directly flowing into Bitcoin. Disassembled, the formula is roughly:
Funds flowing into Bitcoin (Bitcoin rise and fall) = the total amount of money in the market * the percentage of Bitcoin in the total amount
In the current cycle, what situation will make the Fed led by Powell and the Treasury led by Yellen inject a large amount of US dollar liquidity?
1. The common task of the two departments is to ensure economic growth under the premise of controlling inflation (target value is 2%)
2. So if inflation drops quickly + the economy is not good, there will be a lot of room for large-scale liquidity; otherwise, more liquidity cannot be injected (for example, the data level in the past month shows that inflation is sticky + the economy is very good)
Analysis 1: The total amount of money in the market is fluctuating at a high level (US dollar liquidity)
1. The short-term rise and fall of risky assets is highly positively correlated with US dollar liquidity
The Fed led by Powell and the Treasury led by Yellen will increase US dollar liquidity through a series of tools and policies under the premise of controlling inflation. The biggest macro factor for the rise and fall of risky assets like Bitcoin in the short term is the amount of US dollar liquidity (hot money)
2. Limited room for inflation to fall, resulting in the two being unable to help
At present, due to the limited room for inflation to fall and its strong viscosity, the two (Powell and Yellen) cannot risk inflation getting out of control by injecting excess liquidity into the market (if the subsequent inflation rate and magnitude exceed expectations, then the speed and magnitude of liquidity they can inject into the market will be greater)
3. The US economy is very good (at least in terms of data), but it may be the only breakthrough in the future
The US economy is very good, which makes the idea of continuing to inject liquidity into the US dollar worse. However, judging from the fact that the non-farm payrolls announced last night were lower than expected (i.e. the economy was not good), which led to a sharp rebound in risky assets, the subsequent economic data that were lower than expected were the only breakthrough for the two to inject liquidity.(So in the future, we should pay close attention to whether the US economic data will continue to fall short of expectations under the condition of sluggish inflation)
In summary, if inflation continues to be sluggish and the US economic data will not fall short of expectations by a large margin, it is expected that the total amount of hot money in the market will fluctuate in a narrow range at a high level.
Analysis 2: The percentage of the total amount flowing into Bitcoin
The old money has been exhausted, and the new money is still on the way. In the short term, the percentage of the total amount flowing into Bitcoin will not have much room for growth.
The current unilateral market of net inflows of funds from US retail investors through BTC spot ETFs has basically ended, and the net inflow of funds from the entire Bitcoin has been exhausted in stages. However, traditional financial institutions such as the pension fund of the xx state government and the sovereign fund of xxx, which manage hundreds of billions or even trillions of dollars, are still holding internal meetings to discuss what is the big pie, how to buy it, how much to buy, etc. (Family members, please be patient and give these reinforcements some time. It is expected that the vanguard of the regular army will join the battlefield with real money in the second half of this year and start buying big pie)
Based on analysis 1 and analysis 2, the overall environment in the next few months does not support a unilateral upward trend
When will the big pie see a unilateral upward trend again?
It is expected to be in the second half of this year (probably around October)
Core logic:
1. More money in the market:
Reason 1: The inflation level continues to decline, giving the Fed and the Treasury objective space to inject liquidity into the US dollar
Reason 2: In the US election on November 4, Biden's chances of winning are currently far behind Trump. At that time, Powell and Yellen will release as much money as possible to help Biden's election if conditions permit
2. The percentage of the total amount flowing into the big cake has increased:
Reason: Institutions with real big money have begun to gradually enter the market (for example, I learned that the pension management scale of a certain state government is between 200 billion and 300 billion US dollars. It is currently discussing and learning about the big cake + communicating with regulators and investors externally, considering long-term allocation of about 1% of the position, which is about 2-3 billion US dollars of gold inflow. That is, only one institution can bring 2 billion+ net purchases to the big cake)
1. Brothers, add positions when you have bullets, and lie down and wait for the regular army reinforcements in the second half of the year when the bullets are used up. Be sure to protect your precious chips!
If you feel helpless, confused, and can't see the direction in trading at the moment, you can come to my village and have a look. The strategy is to click the avatar Kanjianjie, and the condition is to be a real player.
2. Looking back one year later, the current small waves and small movements are all a bottom straight line before the big market starts!
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