Phyrex
Phyrex|May 06, 2025 08:44
The explanation given by Brother Wu regarding the return of manufacturing industry has been very detailed. I would like to extend from Brother Wu's perspective and say whether the return of manufacturing or the weakening of the US dollar is positive or negative for cryptocurrency. To start with, the decrease of the dollar index (DXY) is often corresponding to the increase of investors' risk appetite. In other words, the interest rate of the dollar has decreased, and the yield of saving in the bank or buying treasury bond bonds is too low. It is better to speculate in stocks and currencies. So normally, the price of the US dollar index and BTC is inversely proportional, but for example, in 2024, ETFs are another matter. But there are two main possibilities for the decline of the US dollar index. The first is due to the decrease in US interest rates, which essentially means that the Federal Reserve has entered a state of monetary easing. This kind of decline is what we mentioned earlier, which is beneficial for the risk market. The second reason is due to the expectation of an economic recession, for example, two weeks ago DXY dropped to 97, but Bitcoin also fell along, because at that time it was expected that the economy might decline, so after the GDP and unemployment rate data appeared, DXY returned to 100. So for the conclusion of the US dollar index, we can simply assume that as long as the depreciation of the US dollar is not caused by a recession, it is beneficial for the risk market. Strictly speaking, this is incorrect, but in reality, it can be understood as follows: Non economic recession+depreciation of the US dollar+reduction in US interest rates=favorable risk market Secondly, the return of manufacturing industry is beneficial for the economic development of the United States, but for the risk market and cryptocurrency market, it may be mixed. The joy is that it increases the absorption of real economic funds, and more funds will be invested in real industries, but this part of the funds is likely to be withdrawn from previous investment model assets. Let me give you an example. The reason why BTC outshines others in this cycle is that other counterfeit currencies are hard to catch up with, and even some counterfeit currencies are falling instead of rising (such as DOT), is that under the condition of limited liquidity, more funds are willing to invest in more secure and stable return products. BTC is the cryptocurrency, and the U.S. stock market is the seven sisters including Nvidia. So the return of manufacturing industry will also extract funds from the market while stimulating investor investment. Targets with slow growth or risk and return imbalance may be extracted from liquidity, while higher quality assets will be injected with more liquidity.
+2
Mentioned
Share To

Timeline

HotFlash

APP

X

Telegram

Facebook

Reddit

CopyLink

Hot Reads