Source: Liu Jiaolian

BTC overnight continued to remain around 97k, slightly rising.

A noteworthy macro trend is that the excess liquidity of the US dollar seems to be on the verge of exhaustion. Intuitive data is that the Federal Reserve's RRP (overnight reverse repurchase) reservoir has less than US$500 billion left, and it has plummeted by more than US$2 trillion from its high of US$2.6 trillion in early 2023.

As for the operating principle of RRP, simply put, the bank lends the US dollar to the Federal Reserve, which uses US bonds as collateral and calculates interest once a night every day.

In the Implementation Note after each FOMC interest rate meeting of the Federal Reserve, we will see this sentence:

" >Conduct standing overnight reverse repurchase agreement operations at an offering rate of 4.25% with a daily limit of US$160 billion per counterparty. and with a per‑counterparty limit of $160 billion per day.) (Teaching Link Note: This sentence comes from the executive summary on January 29, 2025)

You can see that RRP gives The interest rate is exactly the lower limit interest rate for the Federal Reserve to adjust the federal interest rate.

This means that investment opportunities in the market that are less than 4.25% lose their investment meaning - you might as well put the US dollar in the Fed's RRP pool to eat the risk-free interest given by the money printing machine.

The actions of the institution are predictive. Starting from the second half of 2021, RRP soared, which shows that institutions expect the Fed to raise interest rates quickly, so as to recycle liquidity from the market and put it into RRP in advance. Since mid-2023, RRP has begun to plummet, which also shows that institutions expect the Federal Reserve to cut interest rates, or that more attractive investment opportunities appear in the market, causing funds to withdraw from RRP.

After all, the RRP liquidity accumulation that was once recovered from the market, which was as high as US$2.6 trillion, actually comes from the water released by unlimited QE (quantitative easing) during the 2020 epidemic rescue.

Chenglian once pointed out that " Throughout 2020, the Federal Reserve printed money crazily, printing US dollars in one year, accounting for 21% of the total amount of US dollars printed in the 107-year history of the US dollar, equivalent to The annual increase of USD was 26.6%. The chart shows that the liquidity of USD soared by about USD 4.5 trillion in 2020 alone.

In order to cope with the inflationary fluctuation caused by the flood of liquidityThe Fed used the "star-absorbing method", and the RRP reservoir once absorbed and accumulated excess liquidity of up to US$2.6 trillion, exceeding half of the large-scale release in 2020, which can be said to have "majorly made great contributions."

In the QT (quantitative austerity) process that the Federal Reserve immediately initiated and continued to this day, the RRP reservoir acted as a buffer for the "secret crossing Chen Cang".

On the one hand, if better investment opportunities appear in the market, such as gold or BTC, funds will be withdrawn from RRP and back to the market.

On the other hand, RRP also provides a source of purchasing power for the Ministry of Finance to issue bonds and financing. As long as the yield given by the Ministry of Finance is good enough, funds can be attracted from RRP to TGA, that is, the Ministry of Finance account. This part of the money will be quickly spent through the US expenditure project and flow back to the market.

So we can think of TGA/RRP as a hedge for the Federal Reserve QT.

In fact, the liquidity released by TGA/RRP into the market has indeed overwhelmed the liquidity that the Federal Reserve QT recycled from the market.

Why do we see BTC making rapid progress in 2023, breaking through $100,000, and setting a record high? Why do we see gold rising steadily? Why do we see US stocks continuing to sing and dance? Ultimately, the Fed QT has become a fool. Excess liquidity is rapidly releasing from RRP to the market.

The magic of finance lies in the transfer of wealth across time and space. Many people can't understand when the dealer's harvest happened.

The US dollar will be released in 2020, and will accumulate in RRP from 2021 to 2022, and will be released from 2023 to 2024.

If USD is regarded as a Dogecoin, then the harvest did not occur when the "minted" of 4.5 trillion yuan in 2020, nor did it occur when the "locked position" of 2.6 from 2021 to 2022. When it comes to trillions, it happens in the process of "selling" 2.5 trillion yuan from 2023 to 2024. In this process, the dealer sells Dogecoin USD to you, exchanging the real value in your hands (such as useful goods) or hard currency (such as BTC, gold).

People who have experienced the corruption circle will generally have a clear understanding of all financial harvesting methods in the world.

The dealer issued a lot of Dogecoins at zero cost. How to trade to get the maximum profit? If you ship directly without any brains, you will definitely not be able to sell at a good price.

First of all, we must first engage in "airdrops" to attract leeks and establish the so-called "consensus". ——This is the "helicopter money" in the years around 2019-2020, which made the world envious.

Then they engage in "locking positions" and "storing coins to generate interest", giving high returns, artificially creating scarcity, and creating a situation where one currency is difficult to find. ——This is the Fed violently raises interest rates, attracting high interest rates, attracting allBall liquidity reflux.

We must also start public opinion propaganda, and use various cooperative media and KOLs to speak with money to shout orders all over the world, hype the market and raise expectations, and cover every leek without blind spots. ——This aspect is simply too easy for controlling global public opinion, global media and world-class long-term breeding technology.

Only when a huge trend has occurred, causing the leeks all over the world to rush in, it is time to reach the last step, and decisively ship, sell, and take action against the leeks. The chips in them were sold to these stupid leeks in batches and rhythmically. ——We are currently in this critical final stage.

From the perspective of trading harvesting, it is easier to understand why it is hesitant about rate cuts.

What kind of inflation and employment are all excuses. The most important thing is that it must try its best to maintain the strength of the US dollar during the entire high-level shipment process, that is, it cannot let the leeks see through the truth and stop charging.

Just like a Dogecoin dealer, when shipping at a high level, you must cooperate with the preparation of various favorable factors and constantly test the market support. In fact, it is the confidence and strength of the leeks to charge, and try to maintain the shipment process. Don’t let the market down at once, so as to ultimately achieve the best price to sell chips and maximize the final returns.

The difference from some meme Dogecoin that runs away after cutting one handful is that the US dollar plate cannot be cut just by cutting one handful, but it must be played for a long time.

After all, it will take only a few minutes to post a meme dog on the chain. So if you play with a dish, you will start another dish and play with a new one. It takes a lot of time and effort to establish a US dollar system.

But the US dollar is not even as good as the local dog. Dogecoin is at least a smart contract on the chain, so the dealer may not be able to over-issuance at will. After cutting a wave and want to continue next time, he can only smash the market and wash the market and recover chips at a low level. It is very difficult. If you are not careful, you will be backfired by retail investors, so most meme Dogecoin choose to abandon the market directly, "leave it to the community", and instead issue a new coin and play it again. The US dollar can be controlled by the dealer and is super-issued at will, so the dealer can win.

So you might as well regard the batch of US dollars that are issued over QE as a new Dogecoin. However, these Dogecoins have a brand continuity, all called USD. This is easy to understand.

The Federal Reserve does QT quantitative tightening in order to recycle a batch of previous batch of local dogs USD. This is like recycling old chips, laying the foundation for the next wave of casting and distributing new chips, and opening up a new harvest.

So, if you use the language of the currency circle to describe the current RRP reservoir is about to run out, it basically means:

The previous local dog USD plate is about to be harvested Prepare to finish. After finishing, you should start preparing to start the next Dog USD plate and start a new round of coin issuance and harvesting.