Bitcoin is expected to enter a bull run again

Recently, after the summer holidays in the Northern Hemisphere, I spent two weeks skiing in the Southern Hemisphere. Most of the time was spent skiing in the wild, an activity that requires first using climbing skins to ascend, and then removing the skins to ski downhill after reaching the top. A typical skiing day consists of 80% uphill and 20% downhill, which consumes a lot of energy.

To maintain my physical fitness, I adopted a special dietary strategy. For breakfast, I eat a hearty meal containing carbohydrates, meats, and vegetables, followed by some high-sugar snacks every 30 minutes, and during breaks, I have main meals that include protein, vegetables, and rice. This dietary approach reminds me of the importance of price and quantity in monetary policy.

At last Friday's central bank meeting, major central banks such as the Federal Reserve pledged to lower policy interest rates. Risk assets immediately rose, but the simultaneous appreciation of the yen could have negative effects. This article will delve into this phenomenon and its impact on the market in the coming months.

Although the U.S. economy does not need to lower interest rates, the Federal Reserve has chosen to provide stimulus. This is because the highly financialized U.S. economy requires continuously rising asset prices. I believe that the Federal Reserve and the Treasury will soon take action to expand the balance sheet to offset the impact of the yen's appreciation.

The appreciation of the yen may lead to the closing of arbitrage trades, offsetting the short-term stimulus brought about by interest rate cuts. In response to this situation, the Federal Reserve may halt the reduction of its balance sheet and even resume quantitative easing. If the USD/JPY exchange rate falls below 140, more aggressive easing measures are expected to be implemented.

The current liquidity environment for fiat currency is extremely favorable. Global central banks are cutting interest rates, the US Treasury is increasing liquidity, and the Bank of Japan is cautiously raising interest rates, all of which provide support for the cryptocurrency market. Although the outlook for the stock market is uncertain, monetary easing will drive the price of assets like Bitcoin, which have a limited supply, to rise.