Bitcoin may enter a bull run again

Recently finished a skiing trip in the Southern Hemisphere, during which I mainly engaged in backcountry skiing activities. This activity requires a lot of energy, with daily energy expenditure exceeding 4000 kilocalories. To maintain performance, I adopted a strategy of combining quick-release energy sugars with "real food" that burns slowly.

This dietary strategy can be likened to the relative importance of price and quantity in monetary policy. Powell recently announced a policy shift, and the Federal Reserve has finally committed to lowering interest rates. Officials from the Bank of England and the European Central Bank also stated that they would continue to cut interest rates.

The market reacted positively to this, with risk assets generally rising. However, it is important to note that this may reduce the interest rate differential between major currencies and the yen, re-triggering the risk of yen carry trades. Unless the money supply is increased through an expanded balance sheet.

From an economic perspective, the Federal Reserve should actually raise interest rates rather than lower them. Inflation remains above target, government deficits are at record levels, and GDP growth is strong. However, the Federal Reserve has chosen to lower interest rates, which is more due to political considerations, hoping to maintain the rise in asset prices.

If the yen appreciates significantly, it may offset the positive effects of interest rate cuts. To cope with this situation, the Federal Reserve and the Treasury may have to adopt more accommodative measures, including halting balance sheet reduction and restarting quantitative easing.

For cryptocurrency holders, the current favorable factors include: global central banks lowering interest rates, the U.S. Treasury increasing liquidity, and the Bank of Japan being cautious about the appreciation of the yen. In this environment, assets with limited supply, such as Bitcoin, may benefit.