Core viewpoint first: After the Trump shooting, the capital market began to price in the "Trump economy" in an all-round way, rather than just the "September rate cut". The logic behind the two is completely different. Specific market performance includes:
The price of Bitcoin soared, all the way back to $66,000. Small-cap stocks in the U.S. stock market were active, breaking the long silence. The U.S. stock market fell back, and heavyweight stocks fell, which reflected that Wall Street institutions were adjusting their positions and re-positioning for the new cycle.
We often say that we should judge a person by his actual actions rather than his words. Judging from the market dynamics, the capital market has already determined that Trump will take office. To understand the core logic of the next bull market, we must deeply analyze Trump economics. A careful study of Trump's policies will reveal a common point:
There are two reasons to advocate tax cuts for domestic enterprises and individuals: first, to strengthen foreign tariffs, and second, to increase government spending and substantially raise the debt ceiling. Raising the debt ceiling requires the support of low interest rates.
The emphasis on technological innovation is intended to solve the financing problems of innovative enterprises, which requires extremely low-cost funds. Only cheap money will flow into innovative technological investment.
Advocate financial innovation, but in a high interest rate environment, financial innovation will be difficult to carry out. Shape the American dream, so that ordinary people can also realize the life of owning a car and a house. But in a high interest rate environment, how can ordinary people afford to buy a house?
Therefore, the core of Trump's economy lies in: cheap money and low interest rate environment. The cost of capital must be kept very low in order to implement Trump's series of economic policies. Wall Street has deeply understood this.
"Cheap money" is most beneficial to risky assets, such as Bitcoin and small-cap stocks. Trump is expected to pull the capital environment back to the state of 22 years ago, which is the fundamental reason for this round of bull market - the market's high expectations for Trump's economy.
Let's talk about the expectation of a rate cut in September. This is not the first time that there has been strong expectations of a rate cut. Looking back at March, the expectation of a rate cut was equally strong, but what was the result? In my opinion, there is still uncertainty about the rate cut in September, and we should not expect too much. It doesn't matter whether there is a rate cut in September, because the market narrative has shifted to Trump economics.
In the next six months, the market will continue to strengthen its expectations for Trump's economics, and the capital market will also bet real money on risky assets. For us in the cryptocurrency field, the next six months will be the second half of this bull market. I have shared the logic behind it with you, and I wish you all good fortune.
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