The world is vibrant, all for the sake of profit; the world is bustling, all for the sake of profit! Hello everyone, I am your friend Lao Cui, focusing on digital currency market analysis, striving to convey the most valuable market information to our fellow coin enthusiasts. Welcome to the attention and likes of all coin friends, and reject any market smokescreens!   

Let's talk about the impact of the US interest rate hike on the cryptocurrency market. Users who have positioned long in the past two days are very worried about the impact of inflation on the US economy, and whether it will backfire into the crypto market. Previously, I provided a complete explanation of the logic behind interest rate cuts and hikes, and pointed out that the US strategy is not very clear, so today I will reorganize it. Many questions need to be observed from a highest authority perspective. In traditional finance, interest rate hikes and cuts are directly linked to the US inflation data, which is also the genesis of the Federal Reserve. As we all know, the Federal Reserve's consistent strategy is to control inflation within 2%. As long as the data has an impact on 2%, whether low or high, there will be adjustments between rate cuts and hikes. So, what will a rate cut bring? It will skew market funds, making funds more liquid, usually starting with an expansion of the balance sheet, meaning more funds flow into the market, thereby driving market liquidity, which allows the lower-income population to gain benefits.

Conversely, an interest rate hike causes funds to flow back to the Federal Reserve and the US government, leading to market deflation. So, according to reality, I believe everyone can see that currency is always in a phase of devaluation. The devaluation of currency directly indicates that inflation has not been properly curbed. The purchasing power of the US dollar in 1900 and 2026 cannot be compared; this is the negative impact of inflation. This is the fundamental reason why cryptocurrencies can gain consensus, controlling inflation allows currency to return to its rightful attributes. It is important to remember that these are the previous definitions regarding interest rate hikes and cuts. When does this rule no longer apply? That is since Biden became president, the employment data that is revised every year can even revise inflation data, and people began to realize that data can be fabricated. This means that the Biden era has completely ended public trust in the US, and people are beginning to awaken. This is also the period of rapid development of cryptocurrencies, increasingly recognized by retail investors.

This makes me wonder, do all presidents only care about the data during their terms? At least Biden and Trump do, if they only care about the data, how do they perceive inflation? The facts prove that they do not care about inflation data since even employment data is starting to be falsified. Now, we need to apply this logic to the real world: when did US inflation become uncontainable? Trade wars? Tariff wars? Don’t overthink, the financial market is always a market where buyers and sellers compete, unable to escape the struggle for pricing power. Whether it’s a tariff war or a trade war, both are a redefinition of market pricing power, hoping to dominate market prices, which leads to conflicting contradictions. Because they want to dominate energy pricing power, Trump’s subsequent disdain for war comes into context; in his eyes, war cannot compare to the energy pricing power, this is the truth.

Looking back further, the US market has always been the largest consumption market globally. They rely on global supply, and we are the largest export market, forming a supply-demand relationship. Suppressing the supply side will inevitably cause inflation on the demand side. Whether through tariffs or so-called industrial transfer, it is harmful to both sides. The supply side’s goods cannot be exported, while the demand side’s goods cannot be satisfied, leading to two extremes: deflation and inflation. Bringing this into reality, the supply side is merely seeking new demand. Thus, there are the China-Europe freight trains, and trading with ASEAN has doubled, even aid to Africa has increased. From the data, diversifying development is undoubtedly successful. And what about the demand side? The so-called failure of manufacturing return and industrial transfer has solved some problems, but the core issue is that there is no one capable of absorbing such a huge demand market. Relying on Vietnam? Or India? Issues related to electricity and transportation remain unsolved; thus, it is a failed strategy. Solving these issues requires time.

Therefore, the current situation arises, and these wars cannot solve the problems. The current market is at the beginning of a schism. The inflation problem transferring to the crypto space is not particularly serious. However, its impact on traditional finance is undoubtedly huge, while the crypto space still possesses hedging characteristics. The only issue is whether the US capital side still has the determination to support the cryptocurrency market. This is the problem that the crypto space needs to contemplate; it can be said that the fate of the crypto space is almost highly bound to that of the US. Many friends are concerned about short-term results; for example, on a day when the US stock market is rising, and the cryptocurrency market is falling, they feel that the crypto markets are completely opposed to the US stock market; there is no significant difference in movement since the end of last year when NVIDIA hit an all-time high and NASDAQ broke historical highs. Bitcoin has also maintained its historical high, essentially without significant differences.

It is just that in the short term, both have different phase targets. The US stock market requires more funds to maintain; saving the US stock market is the strategic goal of the US, while the cryptocurrency market appears comparatively less important, as it symbolizes the future. Interest rate hikes will definitely have some impact on the crypto market; what we need to do is judge whether they will raise rates? In my understanding, this probability is very low. Everyone can think: once interest rates are raised, what kind of impact will it have? U.S. stock market crashes or even halts? U.S. dollar exchange rates rise? Treasury bond yields increase? Then who will repay this huge external debt? Trump facing impeachment? Will he fight desperately for his power? The probability is very high; if Trump’s support rate faces the risk of decline before the mid-term elections, I genuinely believe he will start a war to maintain his power, and he can do it. Compared with this series of consequences, inflation seems so negligible.

Lao Cui summarizes: Regarding the issues of interest rate hikes and cuts, we conclude today. This topic will be directly eliminated in the future; an interest rate hike is impossible this year. A rate cut will become the main theme this year, and the current issue essentially delays the rate cut timeline. However, there will definitely be two rate cuts this year, and regarding the balance sheet expansion, the US has been continuously doing this. It’s necessary to remind everyone that Morgan Stanley has already launched Bitcoin services, and the upgrade of SOL will also conclude, while capital's attention to the crypto space has never diminished. The market movements this year basically align with our predictions from last year, especially during this so-called altcoin season; one can examine the current data, which shows a significant decline. My views on altcoins remain unchanged; 99% of cryptocurrencies cannot recover to historical highs, and even 50% of the cryptocurrencies in this bull market will not double. In the coming week, significant market changes will occur, and everyone must seize the opportunity. Before entering, it’s best to consult with me, trading contracts should be approached carefully!

Original creation by official account: Lao Cui Talks About Coins. For assistance, please contact directly.

Lao Cui's message: Investment is like chess; a master can see five steps, seven steps, or even more than ten steps ahead, while a novice can only see two or three steps. The skilled consider the overall situation and the broader trends and do not weigh individual pieces and positions heavily, with the ultimate goal of winning the game. The less skilled, however, will fight for every inch, frequently changing positions, only striving for short-term results, and thus often finding themselves trapped.

This material is for learning reference only and does not constitute trading advice. Trade at your own risk!

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。