Bitcoin will迎来bull run again

After the recent end of the summer holidays in the Northern Hemisphere, I turned to the Southern Hemisphere for a two-week skiing trip. Most of the time was spent on backcountry skiing, which involves attaching climbing skins to the bottom of the skis to ascend, and then removing the skins to ski down once at the top. This activity is very exhausting, with daily energy expenditure exceeding 4000 kilocalories.

To maintain physical fitness, I have adopted a special dietary strategy. Breakfast is abundant and balanced, including carbohydrates, proteins, and vegetables. During activities, I consume some high-sugar foods every 30 minutes to maintain blood sugar levels. I also regularly eat "real foods" such as chicken or beef, vegetables, and white rice.

This dietary strategy can be compared to the importance of price and quantity in monetary policy. The price of currency is like candy that quickly raises blood sugar, while the quantity of currency is similar to "real food" that burns slowly. Recently, the Federal Reserve, the Bank of England, and the European Central Bank have all indicated that they will lower interest rates, which is equivalent to reducing the price of currency.

The market has reacted positively to this initial news, with risk assets generally rising. However, we should not overlook the fact that this may lead to the appreciation of the yen relative to other currencies, bringing about risks in yen arbitrage trading. Unless central banks in various countries increase the money supply by expanding their balance sheets and printing money, this risk could undermine the upward trend in the market.

The Federal Reserve's decision to cut interest rates at this time goes against the fundamentals of the economy. Inflation is still above target, economic growth is strong, and government deficits are at an all-time high. From an economic perspective, the Federal Reserve should have raised interest rates. However, due to political considerations, the Federal Reserve chose to lower interest rates. This further enhances my confidence in the rise of risk asset prices.

The strengthening of the yen may offset the positive effects of interest rate cuts. If the yen appreciates significantly, the Federal Reserve may have to halt balance sheet reduction or even restart quantitative easing. At the same time, the Treasury may also increase liquidity by issuing more government bonds.

For cryptocurrency holders, the current environment is favorable. Factors such as global central banks lowering interest rates, the U.S. Treasury increasing liquidity, and the Bank of Japan cautiously raising interest rates will all drive the market upward. Even if the stock market may decline due to interest rate cuts, the increased money supply will significantly boost the price of assets like Bitcoin, which have a limited supply.