Author: @Web3_Mario

Abstract: The cryptocurrency market has undergone a wave of major corrections in recent days. The consulting in the market is very messy, and coupled with the negative impact of huge hackers in the currency circle, it has brought difficulties to how to understand the recent market trend in the short term. I hope to share and discuss this with you. I think there are two main reasons for the current cryptocurrency market retracement. First, from a micro perspective, the successive hacking incidents have caused concerns about traditional funds and the risk aversion sentiment has heated up. Secondly, from a macro perspective, DeepSeek's open source week further burst the US AI bubble, coupled with Trump's actual direction of advancement, on the one hand, it triggered market concerns about US stagflation, and on the other hand, it started a revaluation of risk assets.

Micro level: The huge continuous capital losses have caused traditional funds to worry about the short-term trend of cryptocurrencies, and risk aversion has heated up. I believe that everyone still remembers the Bybit that occurred last week and the recent Infini theft incident. There are already a lot of related discussions, so I won't go into details here. Let’s talk a little about the impact of stolen funds on these two companies and how they affect the industry. First of all, for Bybit, although the amount of US$1.5 billion is roughly equivalent to its net profit of about one year in terms of scale, this is definitely not a small amount for a company in the expansion stage. Generally speaking, it is enough for a company to maintain a cash reserve of 3 months to one year. Considering that the exchange business belongs to a high cash flow industry, its cash reserves are likely to be closer to the left level. So let’s take a look at Coinbase’s 2024 financial report and we can roughly draw some preliminary judgments. Coinbase's full-year revenue in 2024 more than doubled from last year to $6.564 billion, net profit of $2.6 billion, while in terms of expenditure, total operating expenses in 2024 were $4.3 billion.

So refer to the data disclosed by Coinbase and combined with Bybit's current expansion stage, spending control will be more radical. It is estimated that Bybit's cash flow reserves are basically between 700 million US dollars. Then, the 1.5 billion user capital loss is obviously impossible to advance by relying on their own funds. At this time, capital lending, equity financing or shareholder capital injection are needed to overcome this crisis. However, no matter which model, considering the hidden concerns about the weak growth of the cryptocurrency market in 2025, the resulting capital cost may be quite large, which will obviously bring certain burden to future corporate expansion.

Of course todaySeeing the news, the core vulnerability of the attack is Safe rather than Bybit itself, then there may be some incentive to recover some losses, but the important factor that plagues the crypto industry is that the legal framework is incomplete, so the relevant litigation process must be lengthy and cost-effective. It may not be easy to recover the losses. As for Infini, it is obvious that the loss of US$50 million is unbearable for start-ups, but it seems that the founder is strong and it is indeed rare to overcome difficulties by investing in funds.

The two consecutive large losses seem to be commonplace for currency traders who are used to high risks, but they have obviously shaken the trust of traditional funds. Specifically, from the fund flow of BTC ETFs, it can be seen that the attack since the 21st has obviously triggered a large outflow of funds, which means that the impact of the incident on traditional investors is probably negative. If the concerns caused are focused on whether it will hinder the formulation of a regulatory-friendly legal framework, then this matter is important. Therefore, it can be said that theft incident is microscopically the fuse that triggers this cycle of reincarnation.

Macro level: geopolitical game between major powers intensifies, DeepSeek open source week reconstructs the competitive landscape of the AI ​​track, and the liquidity migration under the resonance of risk assets entering the revaluation stage

So let's look at some of the impacts at the macro level, and the conclusion is obviously unfavorable to the crypto market in the short term. In fact, after a period of observation, Trump's direction has been clearer, that is, through strategic contraction, exchanging space for time, completing internal integration and industrial reconstruction, the United States can gain the ability to re-industrialize, because technology and production capacity are the most core factors in the game between great powers. The most important factor in achieving this goal is "money", and "money" is mainly reflected in the fiscal situation of the United States, financing ability and the real purchasing power of the US dollar. The relationship between these three points is complementary, so it is not easy to observe the changes in the relevant process, but under the slightest deliberation, we can still figure out some core concerns:

1. The issue of US fiscal deficit; 2. The risk of stagflation in the United States; 3. The strength and weakness of the US dollar;

3. The strength and weakness of the US dollar;

1. The issue of US fiscal deficit;

2. The risk of stagflation in the United States;

3. The strength and weakness of the US dollar;

First of all, the first point is the fiscal deficit problem in the United States. This issue has been analyzed a lot in previous articles. Simply put, the core reason for this round of fiscal deficit problem in the United States can be traced back to Biden's extraordinary economic stimulus bill in response to the new crown epidemic, and the Ministry of Finance represented by YellenBy adjusting the structure of US bond issuance, and by over-issuing short-term bonds, it causes interest rates to invert, thereby reaping wealth globally. The specific reason is that over-issuing short-term bonds will lower the price of short-term US bonds on the supply side, thereby increasing the yield on short-term US bonds. The increase in short-term US bonds will naturally attract the US dollar to return to the United States, because you can enjoy excessive risk-free profits without losing time costs. This temptation is great. This is also why capital represented by Buffett chose to sell a large number of risk-free assets in the previous cycle and increase cash reserves. This puts great pressure on other sovereign exchange rates in the short term. In order to avoid excessive exchange rate depreciation, central banks of various countries have to sell short-term bonds in a loss-making state on the basis of discounts, turning floating losses into real losses in exchange for a stable exchange rate of US dollar liquidity. In general, this is a global harvesting strategy, especially for some emerging and trade surplus countries. However, there is also a problem in doing so, that is, the debt structure of the United States will increase its debt repayment pressure in the short term, because short-term debt needs to be paid with interest when maturity. This is the origin of the debt crisis caused by this round of US fiscal deficit, and it can also be said to be a thunder left by the Democratic Party to Trump.

The biggest impact of the debt crisis lies in affecting the credit of the United States, thereby reducing its financing capabilities. In other words, the United States needs to pay higher interest rates to raise funds through Treasury bonds, which overall raises neutral interest rates in American society. This interest rate cannot be controlled by the Federal Reserve currency. The raised neutral interest rate puts huge pressure on corporate operations and will cause stagnation of economic growth. The stagnation of economic growth will be transmitted to ordinary people through the employment market, which in turn triggers a shrinking investment and consumption. This is a negative feedback closed loop that triggers an economic recession.

And the focus of observation on this main line is on how Trump reshapes the US fiscal discipline and solves the fiscal deficit problem. Specifically, the DOGE Efficiency Department led by Musk, the process of reducing spending in the United States and the redundant staff layoffs, as well as the impact on the economy. At present, Trump has a very strong internal integration force in this round, and reform has entered the deep waters. I will not track progress here, but I will only introduce some of my own observation logic.

1. Focus on the Department of Efficiency The degree of radical advancement, such as the excessive withdrawal and reduction, will inevitably cause short-term concerns about the economic outlook, which is usually unfavorable to risky assets.

2. Pay attention to the feedback from macro indicators, such as employment data and GDP data.

3. Pay attention to the progress of tax cuts.

We cannot underestimate the impact of expenditure and employees on the US economy. Usually we think that the proportion of expenditure must be higher than that of the United States, but in fact this is a wrong impression. The US spending accounts for 17.2% of GDP, while 16.51%, and expenditure is usually transmitted to the entire economic system through multiples of the industrial chain. The structural differences between the two sides mainly reflect the high proportion of consumption in the US GPD, while the proportion of imports and exports in the GDP composition is a higher proportion of imports and exports. This represents two different ideas for boosting the economy. For the United States, expanding foreign demand and increasing exports is a means to boost the economy, and for the sake of domestic demand, there is still great potential to be tapped.

The same is true for consumption. In this picture, we can see that the salary level of the department is not low in the entire industrial chain, and reducing redundant staff has also hit the US economic growth on the consumption side. Therefore, overly radical advancement will definitely trigger panic in the economic recession. Some things will slow down and get around, but they must also cooperate with Trump's overall progress. As for the advancement of tax cuts, it seems that Trump's focus is not yet here, so the hidden worries of the decrease in income brought about in the short term are not obvious, but we must also be vigilant.

1. How will DeepSeek further impact the AI ​​track. 2. Promotion of the US sovereign fund.

3. The impact of tariffs and geopolitical conflicts on inflation.

left;">The author believes that the most significant impact in the short term is the first point. Friends who are interested in technology may know that DeepSeek's open source week has many achievements that are extremely shocking, but they all point to one point that the demand for computing power of AI has greatly reduced. This has allowed the stock market to remain stable in the past interest rate hike cycle of the United States lies in the huge narrative of the AI ​​track and the United States' monopoly on the upstream and downstream of the AI ​​track. The market gives the US AI sector a very high valuation, so naturally the US AThe new round of economic growth driven by I is optimistic, but all this will be reversed by DeepSeek. The biggest impact of DeepSeek lies in two aspects, one is on the cost side, that is, it greatly reduces the requirements for computing power, which has led to a significant pullback of the performance growth potential of upstream computing power providers represented by Nvidia. On the second side, it broke the US monopoly on downstream AI algorithms through open source, and then suppressed the valuation of algorithm providers represented by OpenAI. Moreover, this impact has just begun, and it depends on how the US AI will respond at that time, but in the short term, it has shown that the valuation of US AI stocks has been pulled back and the valuation of technology stocks has returned.

In fact, for a long time, the United States suppressed the valuation of companies through public opinion suppression, which actually put them in an undervaluation state. Thanks to the grand narrative brought by DeepSeek to the upgrading of manufacturing industry and Trump's relatively gentle attitude towards China, it reduced geopolitical risks, and the valuation of Chinese and American companies has returned. According to CICC's report, the rise in this round of Hong Kong stocks is mainly due to the influx of southbound funds, that is, the influx of capital from the mainland side and the influx of passive capital from overseas, while overseas active funds are subject to Trump's response. There has been no obvious change in the investment restrictions of enterprises, but liquidity observation is also very important. After all, there are many means to bypass direct investment and enjoy the dividends of this wave of corporate valuation return, such as investing in stock markets with high correlations such as Singapore. The changes in capital flow are relatively easy to identify from the Hong Kong dollar exchange rate. We know that the Hong Kong dollar and the US dollar are a joint exchange rate system, that is, the exchange rate of the Hong Kong dollar against the US dollar will stabilize before 7.75 to 7.85. Therefore, when the Hong Kong dollar approaches 7.75, it means that foreign capital's willingness to invest in Hong Kong stocks has strengthened.

The second point worth paying attention to is the construction of the United States sovereign wealth fund. We know that sovereign wealth funds are a good supplement to any sovereign, especially a trade surplus with a large US dollar. Among the top ten sovereign wealth funds in the world, 4 in the Middle East and 2 in Singapore, and the number one is Norway Global Pension Fund, with a total asset size of about US$1.55 trillion. Influenced by the constitutional framework of the US federal government, it is actually difficult for the US to establish a sovereign wealth fund, because the federal government can only receive direct taxes and its financial resources are relatively limited. The US is currently experiencing the dilemma of fiscal deficits. However, Trump seems to instruct the Treasury DepartmentEstablishing a trillion-scale sovereign wealth fund is naturally a means to alleviate the fiscal deficit. However, the question here is where the money comes from and what to invest in?

At present, according to the new US Treasury Secretary Becent, it seems that he hopes to reprice the US gold reserves to provide $750 billion in liquidity for sovereign funds. The reason behind this is that according to Vol. 31, Article 5117 of the US Code, the current legal value of 8,133 metric tons of gold in the United States is still US$42.22 per ounce. If calculated based on the current market price of $2,920 per ounce, the United States will have an unrealized return of $750 billion. Therefore, additional liquidity can be obtained by amending the law, which has to be said to be a clever approach. However, if it is passed, the US dollar used for investment or alleviating debt pressure will inevitably be exchanged for selling gold, which will inevitably have an impact on the trend of gold.

As for what to invest, I believe that it is likely to be carried out around the purpose of returning production capacity to the United States, so the impact on Bitcoin is probably limited. In previous articles, I have analyzed that the value of Bitcoin relative to the United States in the short and medium term is a target for economic bottoming out, which is based on the fact that the United States has sufficient pricing power on this asset. But in the short term, the economy has not experienced a significant recession, so this is not Trump's main axis, but an important tool to survive the pain of reform.

The last thing is the tariffs. The hidden concerns in tariffs have actually been well replaced. At present, tariffs are more of a bargaining chip for Trump's negotiations than necessary choices. This can be seen from the proportion of tariffs imposed on China that Trump is still relatively restrained, which naturally considers the impact of high tariffs on internal inflation. The next step I am more interested in is the tariffs on Europe and what rewards the United States can exchange for. Of course, I am concerned about the process of rebuilding independence of the EU. Harvest Europe to restore its own strength is the first step for the United States to participate in this game between great powers. As for inflation risks, although CPI has grown for several consecutive months, considering that the overall situation is still at a controllable level, coupled with the easing of Trump's tariffs, the current risk does not seem to be great.

Finally, let's talk about the trend of the dollar. This is a very critical issue and needs to be observed continuously. In fact, the debate on the strength and weakness of the dollar under Trump's new term is continuing. The speeches of some key figures here have significantly affected the market. For example, Stephen Milan, the latest economic adviser appointed by Trump and the current chief of the White House economic think tank, said that the United States needs a weak dollar to boost exports and promote internal reindustrialization. After causing panic to the market, US Treasury Secretary Bescent came forward in an interview on February 7To appease the market, it said that the United States will continue to be "strong US dollar" at present, but the RMB is a bit overly undervalued.

In fact, this is a very interesting thing. Let's take a look at what the impact of the strong and weak dollar on the United States? First of all, a strong US dollar will have two main effects, first of all, on asset prices. As the US dollar appreciates, US dollar-denominated assets will perform better. For the United States, it is mainly beneficial to US bonds, US stocks that are global companies, etc., that is, it increases the market's enthusiasm for purchasing US bonds. Secondly, in terms of industries, the stronger purchasing power of the US dollar is beneficial to the cost reduction of US global enterprises, but it suppresses the competitiveness of domestic industrial products in the international market and is not conducive to internal industrialization. The impact of a weak dollar is the opposite. Considering Trump's overall concept is based on improving production capacity through industrial return, and thus enhancing the competitiveness of the game between major powers. Then it seems that the weak dollar is the right solution. But there is a problem here. A weak dollar will lead to a depreciation of US dollar-denominated assets. Considering the current fragility of the US economy and financing pressure, the weak dollar will be too fast, which will lead to the United States being unable to survive the pain period brought by reform.

There is a representative event here to illustrate this pressure. In Buffett's annual shareholder letter on February 25, it does not point out dissatisfaction with the US fiscal deficit issue, which obviously exacerbates market concerns. We know that Buffett's capital allocation strategy for a long time in recent times is to choose to clear out the risky assets that are overvalued in the United States in exchange for more cash reserves to allocate US short-term Treasury bonds, and at the same time, it is also a means of interest rate spread arbitrage. It does not need to be discussed here. What I want to say is that Buffett's view has a strong influence in the market, and there will naturally be a unified concern about the capital of the US dollar over-allocated capital, which is the real purchasing power of the US dollar, that is, the concern about the depreciation of the US dollar. Therefore, the pressure to enter the depreciation channel too quickly is very great.

But no matter how you exchange space for time and slowly reducing debt, it will become the choice between China and the United States, and the US dollar trend is likely to move out of the pattern of strong first and weak later. Explain that changes in dollar-denominated assets will also move with this cycle. Cryptocurrencies are also one of the assets affected by this wave.

Finally, I want to talk about my views on the cryptocurrency market. I think there are too many uncertainties in the current market, so individual investors can choose the dumbbell strategy to enhance the anti-fragility of their investment portfolio. On the one hand, blue-chip cryptocurrencies may participate in some low-risk DeFi returns, and on the other hand, some high-volatility targets will be allocated at low prices. For the short-term trend of the market, the combination of many unfavorable factors has indeed led to certain price pressure, but it seems that there is no clear structural risk, so if the market isWhen there is excessive retracement caused by panic, appropriate position building is also an option.