Bitcoin cannot be taxed! After the end of deleveraging, will BTC welcome excellent trading opportunities?

Once the deleveraging process is over, Bitcoin will have an excellent trading opportunity. This article is based on an article written by fejau and compiled, compiled and contributed by Foresight News. (Synopsis: Play real? Putintu announced the Russian-Ukrainian war "Easter ceasefire for 30 hours"! Bitcoin rose above 85,000 magnesium) (Background added: rich dad shouts: early warning that the crash is coming! It's not too late to buy bitcoin, gold, I'm sure BTC will exceed $1 million in ten years) I'd like to write down something I've been thinking about all along, which is how Bitcoin might behave when it goes through a major shift in the flow landscape that hasn't been seen since its inception. I think that once the deleveraging process is over, Bitcoin will have an excellent trading opportunity. In this post, I will elaborate on my thoughts. What are the key drivers of Bitcoin's price? I will draw on Michael Howell's research on the historical drivers of Bitcoin's price action, and then use these results to further understand how intertwined factors may evolve in the near future. As the chart above shows, the Bitcoin price is driven by these factors: Overall investor preference for high-risk, high-beta assets Bitcoin's correlation with gold Global liquidity Since 2021, my simple framework for understanding risk appetite, gold cashing, and global liquidity is to use the fiscal deficit as a percentage of gross domestic product (GDP) as a quick indicator to gain insight into the fiscal stimulus that has dominated global markets since 2021. Institutionally, the higher the fiscal deficit as a percentage of GDP, the higher the inflation and the increase in nominal GDP, so for enterprises, because income is a nominal indicator, their revenue will also increase. For businesses that can enjoy economies of scale, this is a boon for their profitable growth. To a large extent, monetary policy has been on the back burner in the face of fiscal stimulus, which is the main driver of activity in risky assets. As George Robertson's frequently updated chart shows, monetary stimulus in the US has been very weak compared to fiscal stimulus, so I will leave monetary stimulus out of consideration for the time being in this discussion. As we can see from the chart below of the economies of major Western developed countries, the fiscal deficit in the United States as a percentage of GDP is much higher than in other countries. With such a large fiscal deficit in the United States, revenue growth dominates, which makes the U.S. stock market outperform other economies: The U.S. stock market has always been the main marginal driver of risk asset growth, wealth effect, and global liquidity, and thus has become a gathering place for global capital, because capital is best treated in the United States. Because of this dynamic of capital inflows into the United States, combined with a large trade deficit, which has led the United States to exchange commodities for foreign-held dollar foreign exchange, which in turn reinvests dollars in dollar-denominated assets (such as U.S. Treasuries and "Big Seven" technology stocks), the United States has become the main driver of all global risk appetite: Now, back to the aforementioned Michael Howell's research. Risk appetite and global liquidity have been largely driven by the US over the past decade, and this trend has accelerated since the pandemic as the US fiscal deficit is extremely large compared to other countries. Because of this, although Bitcoin is a globally liquid asset (and not just related to the US), it shows a positive correlation with the US stock market, and this correlation has been increasing since 2021: Now, I think this correlation between Bitcoin and the US stock market is false. When I use the term "false correlation", I am speaking in a statistical sense, that is, I think that the third causal variable that is not shown in the correlation analysis is the real driver. I think that factor is global mobility, and as we said earlier, global liquidity has been dominated by the United States for almost a decade. When we delve into statistical significance, we must also determine causality, not just positive correlation. Fortunately, Michael Howell has also done some excellent work in this regard, using the Granger Causality test to determine the causal relationship between global liquidity and Bitcoin: What conclusions does this lead us to use as a benchmark for our further analysis? Bitcoin prices are primarily driven by global liquidity, and since the U.S. has been the dominant factor in global liquidity growth, there is a false correlation between Bitcoin and the U.S. stock market. Over the past month, some major points have emerged as we all speculate about Trump's trade policy goals and the restructuring of global capital and commodity flows. I summarize them as follows: The Trump administration's desire to reduce trade deficits with other countries mechanically means fewer dollars flowing abroad that would otherwise be reinvested in U.S. assets. If this is to be avoided, the trade deficit cannot be narrowed. The Trump administration believes that foreign currencies are artificially undervalued and the dollar is artificially overvalued, and wants to rebalance the situation. In short, a weaker dollar and a stronger currency will lead to higher interest rates in other countries, prompting capital to flow back to their home countries to reap these interest rate gains, which would be better from a foreign exchange-adjusted perspective and would also boost their stock markets. Trump's "shoot first, ask later" approach in trade negotiations is pushing the rest of the world out of its razor-thin fiscal deficit relative to the United States and investing in defense, infrastructure and, in general, protectionist government investments to make itself more self-sustaining. Whether or not tariff negotiations ease, such as with China, I believe that "the genie has been released from the bottle" and countries will continue this effort and will not easily turn back. Trump wants other countries to increase defense spending as a percentage of GDP because the U.S. bears a lot of money on it. This would also increase the fiscal deficit. I will put aside my personal views on these views, as many have already spoken out on them, and I will briefly focus on the implications they could have if they were logically developed: money would leave dollar-denominated assets and return to their home countries. This means that the US stock market will underperform the rest of the world, bond yields will rise, and the dollar will depreciate. The fiscal deficits in the countries to which these funds flow will no longer be limited, and other economies will start spending and printing money to finance the growing fiscal deficits. As the US continues to shift from a global capital partner to a protectionist role, holders of dollar assets will have to raise the risk premium associated with these previously considered quality assets and will have to set a wider margin of safety for these assets. When that happens, this will lead to higher bond yields, and foreign central banks will be interested in diversifying their balance sheets away from relying solely on U.S. Treasuries and shifting to other neutral assets, such as gold. Similarly, foreign sovereign wealth funds and pension funds may also make such diversification adjustments to their portfolios. Contrary to these views, the United States is a center of innovation and technology-driven growth, and no country can take its place. Europe is too bureaucratic and socialist to develop capitalism like the United States. I understand this view, which may mean that it will not last for many years...