Source: Currency Trader

In the past month, we have always believed that 88,000 is the bottom of this round of adjustment, mainly based on two reasons. First of all, since MSTR released its US$42 billion holdings increase plan, 88,000 is the lowest average price among 7 purchases, which has become a key support for the continued operation of the MSTR bull flywheel. Secondly, among the Bitcoin ETF put options that expired on January 17, the proportion of put options below 88,000 has been less than 20%, indicating that the main short sellers have no intention of significantly suppressing the market. Therefore, we have always believed that this round of adjustments is a short trap of "reversing to pick up others" before Trump came to power, and this view has now been verified!

Although market trading volume is still sluggish, driven by Trump’s new encryption policy, speculative enthusiasm in some parts of the market is still high. On January 18, TRUMP, the meme currency issued by the Trump family on Solana, soared from US$0.18 to US$95, an increase of 52,700%, setting a myth of a hundredfold increase in 6 hours. According to on-chain data, approximately 476 addresses gained hundreds of times during the TRUMP pull. An unknown whale address bought 5.97 million TRUMP for US$1.1 million 90 seconds after TRUMP went online. The cost of each item was only US$0.18, and the current floating profit exceeds US$400 million. With the popularity of TRUMP transactions, the DEX transaction volume on the SOL chain surged sharply. As a result, the SOL chain, which is known for its high performance, also experienced congestion, and the price of SOL increased accordingly.

From a trading perspective, the explosive start of Trump’s new encryption policy actually brings two major positive signals: 1. The funds with the highest risk appetite in the market are still actively looking for new trading main lines to strengthen the narrative. Logical currencies can still obtain extremely high valuation premiums. 2. The President of the United States' personal exit may greatly lower the compliance threshold for personal currency issuance. At the same time, Trump's wealth-making effect will also set off a trend of celebrity currency issuance, which will bring new increments to the market. As White House crypto director David Sacks said, the unfriendly rule against cryptocurrencies is over and a new era of cryptocurrency innovation in the United States has just begun. Therefore, in the long term, no matter how the market fluctuates, the market will not lack trading opportunities. At the same time, driven by TRUMP’s strong money-making effect, Trump-related topics have become the most certain trading direction in the short term.

Currently, Trump’s main trading lines have three clear directions: First, the group of tokens held by the WLFI protocol initiated by the Trump familyThe second is projects led by allies that provide funds and resources to support the Trump campaign, such as DOGE and XRP; the third is Meme coins issued by Trump and his family, including TRUMP and MELANIA. Among them, the first main line is more like the long-term layout of the Trump family, because it not only has a complete compliance basis, but the potential increase is also very considerable.

On January 19, the Trump family reduced its holdings of TRUMP worth $46 million in the name of market making, and at the same time increased its holdings of ETH by $48 million through WLFI. Affected by the popularity of TRUMP, WLFI's subscription volume surged, and all 20% of the first round of token supply has been sold out. Due to strong market demand, the project team decided to sell an additional 5% of the token supply, which means that WLFI's sales scale on January 19 has exceeded three times in the past three months. As long as the Trump family continues to implement the strategy of exchanging "air coins" for value coins, it is only a matter of time before the WLFI token portfolio rises.

However, in the existing market structure, the activity of Trump’s main line also means that it has siphoned off market liquidity. From January 19th to 20th, as TRUMP and MELANIA skyrocketed, old altcoins and AI Meme crashed one after another, and the tight market liquidity was undoubtedly evident. Based on past experience, an increase in trading congestion is usually accompanied by an increase in existing positions. Once market sentiment reaches its peak and there is a lack of new incremental funds entering the market, the market will often fall off a cliff. Therefore, when the Trump theme recedes, the market may experience violent fluctuations.

From a macro perspective, since December 1, 2024, U.S. bond yields have continued to rise and exceeded the federal funds rate, causing great concern in the market. According to past experience, the continued rise in risk-free interest rates will often have a significant crowding-out effect on the liquidity of risky assets. This is also the main reason for the recent continuous decline of altcoins and small-cap companies in US stocks. However, as the rising inflation in the United States eased in December, U.S. bond yields fell from highs, and altcoins also rebounded strongly, leading to a sharp increase in market expectations for the "altcoat season." It is worth noting that although the constraints of the ten-year U.S. Treasury interest rate on risky assets have weakened, its yield is still at a high level in the past five years, and its inhibitory effect on speculative sentiment is still obvious.

If the interest rate on the 10-year U.S. Treasury note cannot fall back below 4.3% again (the level when the Trump deal was launched) level), it is difficult for altcoins to see large-scale market trends. Therefore, the current operating strategy of altcoins is still focused on trading opportunities. In addition, as U.S. bond yields rose from 3.67% to 4.76%, the scale of global M2 also fell from 108T to 104.5T. Historically, Bitcoin has generally fluctuated in the same direction as global M2. If M2 cannot stop falling and stabilize, Bit will also be under further pressure.

In the existing market, funds always break out in the direction of least resistance. Following the trend is to avoid making mistakes. The best strategy. Therefore, under the current market conditions, investors have no better choice except to participate in Trump-themed games. For investors with lower risk appetite, following the WLFI portfolio is also a good idea. As for whether other altcoins have opportunities to make up for their gains, it will depend on whether there is room for improvement in macro liquidity.