Abraham and the Three Angels - Gaspare Diziani

The market has not been doing well recently. It started to adjust after Bitcoin broke through a new high in mid-March, and it has been adjusting for two months now. Many altcoins have pulled back by more than 50%, many inscriptions and runes have lost liquidity, Binance's new coins have lost their wealth-creating effect, and have reached their peak since they went online and have begun to fall endlessly.

Although the market rose yesterday thanks to the news of Ethereum ETF, it remains to be seen how sustainable it will be. One thing is certain: even if it passes, the incremental value and boost to the market will certainly not be as good as Bitcoin ETF.

At the macro level, the expectation of interest rate cuts has been continuously postponed, and countries have been suffering from this round of dollar tide. Many small countries have experienced economic crises and currency collapses, and many large economies have also seen exchange rates fall and are just one step away from recession. Although the US stock index has hit a new high, it is also supported by several large technology companies.

How will the market develop in the future? Why do we need to analyze the market from a macroeconomic perspective every once in a while? Because after global capital entered the crypto market, the composition of participants began to become very complicated. From the internal game of the cryptocurrency circle to the game of global capital, the cryptocurrency circle began to gradually become like the US stock market. Therefore, the impact of macroeconomics and monetary policy on the crypto market has become increasingly important.

A strong America or a declining America?

The current situation in the United States is still quite strange. On the one hand, various economic data show the strength of the United States, such as employment rate, manufacturing index, GDP, etc., all of which show that the US economy is very strong; but on the other hand, many large American companies are laying off employees, credit card and debt default rates are rising, and more and more people at the bottom of the society are doing multiple odd jobs. In our cognition, these are all manifestations of a bad economy. The data contradicts the real experience, giving people the feeling that they are artificially creating a strong and invincible United States. Is it really strong, or is the Democratic Party artificially beautifying the data for the election, or is it looking for an excuse not to cut interest rates?

The domestic political environment in the United States is also very chaotic. First of all, the competition in the election year itself is very fierce, and it is normal for all kinds of unexpected things to happen frequently. Previously, there were various problems such as illegal immigration, aid to Ukraine, and blockade of China. Now, because of supporting Israel, an anti-Semitism awareness bill has been promulgated, which has caused unprecedented social contradictions. Whether it is the Chinese Internet or Western streaming platforms, what we see is a torn and populist America, which is very different from the America previously shaped by the mainstream media controlled by capital.

Some say that the current bill is a trap set by the Anglo-Saxon group (Anglo-Saxon Protestants, now generally referring to the old elite ruling class in the United States) for the Jewish group, hoping to stir up the world's antipathy towards the Jews; some even say that the Jews are parasitic on the United States to complete the restoration of the country, and they are the masters of the United States and the shadow government behind the United States; and some say that the Jews influence the elite groups through organizations such as the Illuminati, the Freemasons, and the Skull and Bones Society, and control all the big companies in the world through Vanguard Funds and BlackRock, becoming the masters behind the world. These conspiracy theories are all groundless, and there is no public and solid evidence to support them. Just listen to them as unofficial history.

Nowadays, Jews no longer use bloodline as the only criterion. As long as they are valuable, there are many ways to become a so-called Jew. Therefore, the Jews we talk about are more like a huge interest group formed by interests, religion, and blood ties, rather than simply being loyal to the Jewish nation or Israel. Therefore, we will not make too many subjective speculations and conspiracy analysis here. Thinking too much will not help our investment but will interfere with it.

When we look at the United States, we usually personify it, such as what is the purpose of the United States' actions, or how I would make decisions from the perspective of the United States, in order to analyze the motives of various American actions. But in fact, as the most powerful country in the world, the conflicts and struggles between different races, different interest groups and factions within such a large country are very fierce. We need to look at its internal differences and contradictions in its global strategy objectively and rationally. It is not that the White House is confused, but that many events and decisions are the result of compromises between different interests.

I have said so much above mainly to show that the contradictions within the United States have become very sharp and the differences among the elites have been exposed. It is becoming increasingly difficult for the United States to absorb nutrients from the world to support itself. When there is not enough cake to share, it can only consume internal energy, which will cause continuous consumption of the national strength of the United States.

Will there be another rate cut?

This round of interest rate hikes has lasted for more than two years, and the "holding pee competition" has entered the second half.

Last year, I thought that interest rates would be cut at the beginning of this year, but I was slapped in the face afterwards. The article in March re-judged that the expectation of interest rate cuts this year should be lowered, and there will be no interest rate cuts in March or even May. It seems to be correct now. The logic is that the United States previously raised interest rates under the pretext of fighting inflation, and brought back the dollar, so that the dollar would return to its strength and offset the depreciation caused by the previous massive money printing. The funds can also take over the US debt, which can be said to kill two birds with one stone. This is an open conspiracy.

However, many signs show that the current high interest rates are still being maintained, and the obvious purpose is to use the dollar tide to pull up some major economies, so that American capital can go to buy at the bottom, and the main purpose is to give funds a place to go. Otherwise, the Americans would not do such a thing that hurts the enemy by a thousand and hurts themselves by eight hundred. The national debt has exceeded 35 trillion US dollars, and it is estimated that the interest on the national debt alone will exceed 1 trillion US dollars this year. How long can the game of borrowing new money to pay off old debts be played?

Everyone knows who the United States wants to explode. However, due to capital control and special national conditions, although it has been tossed around, the exchange rate and economy have been barely maintained. How can Wall Street capital pay such a high price but still not be full? Asian allies Japan and South Korea have become dishes on the menu, and Vietnam and other countries have also begun to face crises. The United States hopes to create another financial crisis in Asia similar to the one that swept Asia in 1997, but I think it is unlikely to happen.

The Fed has considerable independence in decision-making, but a considerable number of Fed voting members are spokesmen pushed out by capital. Therefore, there are also differences within the Fed. It is not Powell's one-man show, and decisions are made by voting members. Looking at Powell's recent speeches, we can see that his speech is soft. Perhaps he wants to cut interest rates, but other Fed voting members have become obstacles.

in conclusion

I predict that the current high interest rates in the United States may be maintained until some major countries (including U.S. allies) or certain regions experience a wide-scale economic crisis, and the United States follows the trend and starts to cut interest rates. Or the U.S. economy will be forced to cut interest rates if there are significant signs of recession.

The fiscal deficit game of various countries has reached a critical point. Once a crisis breaks out this time, its intensity may be beyond our imagination, so it is better to remain vigilant.

But no matter which one it is, we need to lower our expectations for the Fed to proactively cut interest rates. The Fed is now paying close attention to data. If CPI does not drop significantly or employment does not cool down significantly, it may not be possible to expect the Fed to cut interest rates in advance to prevent a crisis.

The longer it is delayed, the more unfavorable it is to the financial market. The current stagnation of the market also shows the uncertainty of participants about the future. If interest rates are not cut until the crisis breaks out, the prices of all risky assets will be hit hard, and the crypto market will be no exception. However, the longer the high interest rate is maintained, the faster the interest rate will be cut later.

Based on the above viewpoints, I think the market should not have a clear direction during this period. The external situation is chaotic, events and conflicts are frequent, and the Federal Reserve, which guides the market, has been slow to make a decision to cut interest rates. The market can rise due to ETF expectations, or it may plummet due to an event. Unlike the 2022 interest rate hike cycle, although there was a rebound, the main theme was a decline. Although there was a big drop in 2023, it rose because of the end of the interest rate hike and the expectation of a rate cut, so you can participate in the market with swing trading.

The next big trend may depend on which comes first: a rate cut or a crisis.

From a longer-term perspective, how long can the strong United States and the strong dollar last? This is a question that every investor needs to think about.

*This article is only a personal opinion and does not constitute investment advice