In the past week, the White House and the Federal Reserve have turned a blind eye to the plunge of US stocks, and neither side seems to have any intention of giving in to the first place in this "coward game". Although creating recession expectations is likely to be just a negotiation method for Trump to put extreme pressure on, the uncertainty of the game has further stimulated the market's risk aversion.

However, as of now, the continued decline of US stocks is more like a behavior of senior management actively compressing valuation bubbles than a precursor to the spiral of crisis. The most typical example is that during the evaporation of US$5 trillion in US stocks, A-shares, Hong Kong stocks, European stocks and gold rose sharply, which is different from the collective collapse of global markets when the US dollar liquidity crisis broke out in the past (USD circulation is the heart of global liquidity).

Although the crypto market has suffered a liquidity backlash in the valuation of US stocks, Bitcoin's structural pressure resistance is still good, which is mainly reflected in three aspects:

1. According to Bloomberg terminal data backtrack, since the global liquidity crisis in March 2020, in the extreme situation where the Nasdaq fell by more than 15% in seven single-month (calculated by 30 days) in the extreme situation where the Nasdaq's seven-month (calculated by 30 days) declined by more than 15%, the amplitude of Bitcoin's adjustment has converged significantly (-21%). Compared with the two historical extremes in March 2020 and -37.2% in June 2022, the volatility this time was compressed by 65.8% and 50.8% respectively.

2. Unlike the extremely pessimistic expectations that several rounds of historical declines have produced extremely pessimistic expectations, this decline, the funding rate of the Bitcoin perpetual contract and the premium rate of the Bitcoin quarterly contract have remained stable, which shows that the will of the main bulls has not wavered in the decline.

3. This adjustment not only has the trend relatively flat, but there has been almost no extreme pin insertion in the time-sharing situation, which shows that the decline is mainly caused by the panic selling of small and medium-sized retail investors, and Giant Whale investors are still holding back the market.

Based on these analyses, the author tends to believe that Bitcoin's decline this time is just a technical retracement after continuous ATH, and the $76,000 area is likely to be the mid-term bottom.

Although Bitcoin will find it difficult to benefit from the liquidity spillover of US stocks in the short term, Bitcoin is still expected to usher in a new round of paradigm growth under the dual stimulation of positive and macro catalysts.

First, as US crypto regulation shifts from "suppression model" to "strategic support", Bitcoin's position in major global assets has been improved unprecedentedly. Especially after Trump announced the establishment of a strategic reserve of Bitcoin

, long-term capital such as sovereign wealth funds and pensions began to increase the allocation of Bitcoin. According to data disclosed in the SEC 13F document in the fourth quarter of 2024, Abu Dhabi's sovereign wealth fund Mubadala purchased a $437 million Bitcoin ETF for the first time, Wisconsin pension fund increased its holdings of Bitcoin ETF from $164 million to $321 million, and Norwegian central bank investment management company significantly increased its holdings of MSTR and COIN in the fourth quarter, expanding Bitcoin exposure to $370 million. According to the ratio of gold to Bitcoin's market value of 10:1, the theoretical allocation ratio of global sovereign wealth funds and pensions to Bitcoin can reach 0.1%-0.2% (1%-2%), that is, 67 billion to 134 billion US dollars.

Secondly, under the framework of the Mar-Lago Agreement, the overvaluation of the US dollar has become the main obstacle to resolving debt and revitalizing manufacturing. In the future, the United States is very likely to reconstruct the current world trade system and financial structure by actively devaluing the US dollar. The end of the strong US dollar cycle will inevitably trigger funds to flow to neutral currencies such as gold and Bitcoin. According to public data, from 1985 to 1987 after the signing of the Plaza Accord, the US dollar depreciated by 50% and 47% against the Japanese yen and the German Mark respectively, and the price of gold rose from about $300 per ounce to about $500, an increase of about 66%. This process led to trillions of dollars in asset re-allocation. The current scale of US dollar assets is tens of thousands of times that of 1985, so the hedging demand brought about by the depreciation of the US dollar will be even greater.

From MSTR's radical Bitcoin investment strategy to Trump's inclusion of Bitcoin Strategic reserves, the United States is building a "dollar reservoir" in the crypto assets field through a multi-dimensional layout. The core logic of this strategy is: by controlling Bitcoin, the most liquid crypto asset in the world, hedging the systemic risks of the US dollar depreciation cycle, while reshaping the power structure of the international monetary system (dividing gold with weaker control in the United States). Therefore, until the goal is achieved, the layout of US capital in the Bitcoin field will continue to accelerate.

During the Fed's balance sheet reduction cycle, spending is the key driving the growth of private sector and residents' incomes, and it is also the basic platform that supports U.S. consumption and investment. If the Fed's currency countercyclical adjustment is lacking in the process of reducing spending, not only will the debt reduction target be difficult to achieve, but economic growth may also face the risk of stalling. This has led to the general concern that the Fed will become a strategic obstacle for Trump. But in fact, one year after the signing of the Plaza Accord (in 1986), the Federal Reserve cut interest rates three times in a row, and CPI fell from 3.5% to 1.9%. The fundamental reason is that fiscal tightening suppresses inflation more significantly. Therefore, the author agrees with Trump and Bescent’s view that interest rates will drop soon!