Every monetary cycle in the United States ends only when someone loses money and makes sacrifices.

Now, factors within the crypto market itself can no longer influence market trends, and endogenous ecological activities have fallen to the freezing point of a bear market. Except for Bitcoin, which has ETF support, copycats continue to face pressure from capital outflows.

In addition to the continued lifting of restrictions on altcoins and a bunch of new coins coming online to suck blood, at the macro level, the core determining factor is the Federal Reserve, which determines the direction of institutional funds.

The Federal Reserve is now facing the pressure of $34 trillion in debt and a high interest rate environment of 5.5%. The US interest expenditure has exceeded the defense expenditure, and the high interest rate maintained by the US Treasury is putting increasing pressure.

However, if interest rates are cut, inflation will remain high. The market knows that preventing inflation is just the Fed’s reason, and the most essential thing is still financial game.

The Fed's interest rate hike has provided global capital with safe and almost risk-free investment opportunities in U.S. Treasuries, so a large amount of funds have been used to buy U.S. Treasuries through Japan's foreign exchange market.

Here is some knowledge: Treasury bonds have an existing market and a new market. When interest rates rise, the price of existing debt will fall, leading to an increase in yields, while the financing cost of new debt will also increase; when interest rates fall, the price of existing debt will rise, leading to a decrease in yields, while the financing cost of new debt will also decrease. Currently, the existing debt of the United States is about 34 trillion US dollars, mainly held by American institutions, and overseas investors such as Japan, China, and the United Kingdom are also major investors.

In 2022, the Federal Reserve began to raise interest rates, and the prices of existing bonds fell, causing the value of assets held by institutions to shrink and incur losses. This was also the main reason for the collapse of Silicon Valley Bank in the United States in early 2023, which triggered the banking crisis. The Federal Reserve subsequently provided a rescue (which was essentially indirect monetary easing).

However, foreign institutions are under tremendous pressure, especially Japanese institutions that hold a large amount of U.S. Treasuries. Not only do they have to deal with the losses caused by the decline in bonds due to interest rate hikes, but they also have to hedge the potential risks of exchange rate fluctuations. Now the cost of hedging foreign exchange fluctuations has exceeded 5% and is getting bigger and bigger. The yield brought by U.S. Treasuries will soon be unable to cover it. So even if the market knows that the Federal Reserve is about to cut interest rates and bond prices will rebound, they will still have to sell U.S. Treasuries, unless the United States quickly cuts interest rates to allow bond prices to rebound quickly.

The core of the game is here: the US is willing to let the Fed raise interest rates and let the bonds held by these institutions shrink significantly, but the US is definitely not willing to let the Fed slash interest rates and let the bonds held by these financial institutions appreciate significantly. However, the US does not dare to let the institutions sell US bonds, which will cause market panic, weaken the credit of US bonds and even the US dollar, and make it difficult to raise funds later.

Someone has to lose money here, the bond losses caused by rising interest rates, whoever fills this hole, the United States can cut interest rates. Every time the Fed raises and lowers interest rates, there is always someone who sacrifices to end it, and the way is through financial crises. This is also one of the reasons why every time the Fed cuts interest rates, there is always a plunge before the market starts a big bull market.

Everyone is paying close attention to when the Federal Reserve will finally start cutting interest rates. However, the USD-JPY interest rate spread is +5.5%, equivalent to 22 25 basis point rate cuts. One, two, three or four rate cuts over the next twelve months will not significantly reduce this gap. So interest rate cuts are not the core factor.

When a major crisis occurs in the financial market, forcing the Federal Reserve to continue to expand its balance sheet and release a large amount of money, turning on the printing press to bring about a liquidity shock to the US dollar, this will be a sign. This is also a necessary condition for a new trend in the crypto bull market. The Federal Reserve will definitely do this in order to maintain the current hegemony based on the US dollar. The supply of US dollars must increase at some point, and don't fall before dawn.