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On April 8th, Bitcoin returned above $72,000, and stocks related to cryptocurrency surged. MicroStrategy rose by over 11%, Coinbase by nearly 6%, and Marathon Digital by almost 4%. Gold broke through the $2,300 mark, hitting a historic high and continuing its momentum from March.
Despite the Federal Reserve's two-year plan for interest rate hikes and balance sheet reduction, the current environment still maintains high interest rates. Against this backdrop, the market had long been concerned about an economic recession, but starting from 2023, stocks, gold, and Bitcoin, which were originally suppressed by high-interest rates, all rose, even reaching historic highs. Not only did the U.S. economy not experience a recession, but the data became increasingly impressive, leading to stubborn inflation.
The anticipated interest rate cut, initially expected in March, has been postponed to May, and now it's almost certain that there won't be an interest rate cut in May. The probability of an interest rate cut in June has also significantly decreased.
Recently, Federal Reserve Chairman Powell made hawkish remarks: On April 4th, he stated that recent data has not substantially changed the overall situation. They do not intend to cut interest rates until confidence in reducing inflation is strengthened. The Fed has time to let upcoming economic data guide their decisions. The Fed is gradually deciding FOMC's monetary policy in each meeting. Risks are still moving towards a more balanced state. The Fed has not yet completed the goal of "sustainably reshaping 2% inflation."
According to general theory, with weakened expectations of an interest rate cut, stocks and gold should be under pressure. However, U.S. stocks remain strong, and gold continues to rapidly rise, breaking historic highs.
The market is always right. Historically, "gold in times of turmoil, gold in times of prosperity." Gold is a "hedge tool" for developed markets, and its sustained surge indicates that capital believes the market is in "turmoil," with increasing risks and a higher probability of recession.
In the past, after the Fed raised interest rates, they always started out "tough," only to be "forced" to cut rates or even start printing money to rescue the market when the economy receded and the market plummeted.
Now, Chairman Powell believes that the U.S. economic data is still strong, inflationary pressures persist, and the economy is unlikely to experience a recession. However, market funds are pouring into gold for safe haven.
Even in the United States, the financial system's debt has reached astronomical levels, with holes everywhere. The Fed continuously disguises this by various means of liquidity injection, rendering many market data and indicators ineffective. At this point, who should one believe? Market choices.
For gold, if there is a sudden recession, it can serve as a hedge for value preservation. If there is further massive liquidity injection later on, gold can still appreciate. Bitcoin operates on a similar logic, but its volatility is greater and more complex. After a round of ETF-driven Bitcoin surge, short-term funds have taken profits, and long-term chips are temporarily entering an adjustment phase.
In March 2020, when global capital markets plummeted due to the pandemic, Bitcoin also experienced a crash. Many people believed it lacked hedging properties, which is not entirely accurate because gold also fell at the time. The negative impact of a sudden recession often results in the first round of decline caused by a liquidity crisis compounded by leverage collapse. For assets with high volatility like Bitcoin, it's normal to experience significant fluctuations during such crises, and then start a bull market with a surge due to massive liquidity injection.
This is also where Bitcoin differs from gold. |
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Post time 17-4-2024 21:04:18