Yesterday we discussed whether the Federal Reserve’s 50 basis point interest rate cut means that the United States is about to fall into recession?
The final conclusion is that in the short term, the United States is unlikely to fall into recession, but due to market concerns, U.S. stocks may experience relatively large fluctuations.
1. How should we respond? In addition to passively waiting for the market to pull back, what other opportunities are there for proactive attack?
I think now is actually a good time to invest in mainstream projects. Against the backdrop of the Federal Reserve's massive money printing, the crypto market has more room for imagination.
Now that both the United States and China are injecting large amounts of capital, almost all assets have the potential to rise in the next one to two years.
In a low-interest environment, everyone is looking for investment opportunities with higher returns. As a high-risk, high-return asset, Bitcoin may attract more capital inflows to drive up prices.
This rate cut sends a signal that the Federal Reserve hopes to stimulate the economy, making everyone believe in the possibility of economic recovery in the future. Everyone has expectations and is willing to enter the market. In the long run, this will drive Bitcoin up.
Historical data shows that loose monetary policy tends to coincide with bullish cycles in the crypto market.
For example, the violent bull market in the crypto market in 2021 occurred against the backdrop of the Federal Reserve's massive money printing.
The interest rate cut will also lead to a decline in the yield of traditional safe-haven assets, triggering rising inflation expectations. In this case, Bitcoin's anti-inflation characteristics as "digital gold" will be more prominent, attracting more investors.
2. Changes in attitudes of Republicans and Democrats
Judging from the policy environment in the United States, both the Republicans and the Democrats support the development of Bitcoin to varying degrees, which provides a good foundation for its future rise.
Recently, I have noticed that there are fewer and fewer voices opposing Bitcoin. Many political and business leaders have made a big change in their attitude towards Bitcoin.
For example, BlackRock’s CEO Larry said in 2017 that Bitcoin was a tool for money laundering, but now he has become a supporter of Bitcoin and even applied for a Bitcoin ETF.
There is also Trump, who used to be strongly opposed to Bitcoin, but now supports cryptocurrency donations and even issues NFTs himself.
He also recently said that cryptocurrencies have a bright future and could even help the United States repay its $35 trillion debt.
3. Why did these bigwigs change their positions?
In fact, the reason is very simple. On the one hand, it is because of interests. On the other hand, it is because they realize that the development and popularization of blockchain technology is unstoppable.
The development of science and technology is irreversible, and mankind will eventually move towards a more efficient future.
The political environment in the United States provides a good foundation for the development of Bitcoin.
The Republican Party tends to favor small government and give emerging industries more development opportunities; while the Democratic Party manages and promotes industry development through high tax policies.
In the upcoming US election, if Trump is elected, Bitcoin may see a big rise.
Trump supports Bitcoin and has prepared some relevant supporting policies. His small government policy will provide more development opportunities for the Bitcoin industry.
Although the Democrats advocate big government, they also support Bitcoin because they need to obtain tax revenue from it.
The Bitcoin and Ethereum ETFs launched during Biden's administration, as well as regulatory measures on Coinbase and Ripple, are all aimed at better managing and obtaining tax revenue.
Recently, Democratic presidential candidate Harris also stated that if elected president, she will encourage the development of the cryptocurrency industry.
This shows that no matter who becomes president in the end, the development of the crypto industry will be supported.
4. Bitcoin’s path to becoming a reserve asset
Looking back at the development of the crypto industry, Bitcoin has been called a “Ponzi scheme” many times, but amid criticism from the mainstream media, it has made it all the way to the approval of Bitcoin and Ethereum ETFs. This is undoubtedly a huge victory.
Over time, the role of Bitcoin has continued to change, and it has become one of the main assets of many institutions.
Bitcoin may become the most valuable currency in the world in the future. The decentralized nature of Bitcoin makes it free from the constraints of the traditional economy and can be popularized and promoted worldwide.
As Bitcoin and other cryptocurrencies become more popular, the economic boundaries between countries will become less clear.
Bitcoin's scarcity, decentralization and global liquidity make it possible to become an anchor of value in the future.
In order to truly play its role as a reserve asset, Bitcoin needs to gain greater acceptance and liquidity around the world.
With the continuous advancement of technology and the improvement of society's awareness of digital assets, Bitcoin will gradually become a more widely accepted currency and value storage tool.
Summarize
So in general, as long as the United States does not fall into recession and the U.S. stock market does not experience a major correction, the crypto market may usher in a big wave of market conditions against the backdrop of the Federal Reserve's massive money printing.
In addition to allocating Bitcoin and Ethereum, you can also pay attention to projects in the AI, DEPIN, RWA, and MEME sectors. Judging from the current trends, these sectors may become the mainstream narrative of this bull market.
Why did these sections become the mainstream narrative? We will continue to talk about this tomorrow.
