What is Trump's next move with the Federal Reserve? Where is the future of the cryptocurrency market headed?

Source: Talking about Li and Talking about the Outside

In yesterday's article (March 11), when we discussed the topic of Trump, we mentioned a "debt" issue. Some friends left messages in the background saying they didn't understand, so here we will make a simple extension and supplement on this topic from the previous article.

First, let's take a brief look at the scale of U.S. debt data:

The scale of U.S. government debt has always been relatively high. According to reports from relevant media, as of December 2024, the U.S. government's debt will exceed $36 trillion, and nearly $3 trillion of U.S. Treasury bonds are expected to mature this year.

Next, let's look at the yield on the 10-year U.S. Treasury bonds:

Currently, the yield on the 10-year U.S. Treasury bonds has dropped to 4.27%, as shown in the figure below. Combined with the recent trends in the U.S. stock market, simply put, the decline in Treasury yields alongside the stock market often indicates that market sentiment is not good, and investors' concerns about the economic outlook are intensifying.

The main reasons for the recent market turbulence are Trump's tariff policies and various uncertainties surrounding Trump himself, which have triggered market risk aversion.

If we consider both the debt issue and the Treasury yield issue comprehensively, we will find an interesting phenomenon: the increase in global risk aversion will, to some extent, push up the demand for U.S. Treasury bonds, leading to a decrease in Treasury yields (which corresponds to an increase in Treasury prices). A decline in interest rates is clearly beneficial for the current situation of the U.S. government, as it can refinance its debt at more favorable rates (i.e., issuing new debt to repay old debt).

In simple terms (speculation), it seems that Trump does not like the current high yield on 10-year bonds since the interest rates paid by the U.S. government during refinancing are usually closely related to market rates. When Treasury yields decrease, the U.S. government can issue new debt at lower rates, thereby continuing to reduce future debt interest costs.

The logic above can be expressed in layman's terms: Trump hopes for a "market crash" to force bond prices to rebound (note: a significant drop in the stock market can directly lead to fluctuations in the financial market, but after a short-term pain, it will still form a long-term situation favorable to the U.S. government). This would lower bond yields, allowing for cheaper government refinancing. Therefore, after Trump took office, he initiated a series of actions, including tariffs and layoffs (the efficiency department that Musk is currently leading is doing this). At the same time, the economic recession dilemma brought about will also force the Federal Reserve to take direct action, as lower bond yields not only benefit the government in refinancing but may also prompt the Federal Reserve to cut interest rates quickly.

Thus, in the previous article, we said: Trump seems to want to quickly become a great American president, and the simplest way to achieve this seems to be to "print money," making the dollar "great" again. The easiest path to achieve this currently seems to be manipulating "debt."

Of course, all of the above is still a kind of fantasy and speculation on our part. Only Trump knows what he really thinks and what the U.S. government's plans are going forward. As for how the Federal Reserve will respond to the market's violent fluctuations and whether it will cut interest rates again in June this year, these questions remain to be observed continuously; we can only take it one step at a time.

Next, let's return to the topic of the cryptocurrency market and continue our discussion.

Since the beginning of this cycle, especially with the official approval of ETFs, more and more institutions are deeply participating in the cryptocurrency market, and some institutions (projects) in the cryptocurrency market are establishing closer ties with traditional markets.

Many people say that the current cryptocurrency market is increasingly resembling the U.S. stock market. I also agree with this statement because the upcoming cryptocurrency cycle is likely to align more with macro trends, rather than having its own time-running rules like the previous two bull market cycles.

I remember mentioning in some earlier articles that this bull market (2024-2025) could be the last major opportunity for ordinary people. For example, in an article from December 2023, we mentioned that the next bull market (i.e., this bull market) might be the last chance for large-scale growth in the cryptocurrency market. At that time, our reasoning and expectations were mainly based on regulation (policy) and institutional participation. As shown in the figure below.

In other words, as we move forward, with more traditional institutions and national teams entering the market, the cryptocurrency market will become increasingly "formal." This seems unfriendly to most ordinary people who hope to get rich overnight or engage in speculation, meaning that in the future, we may (this is just a possibility and speculation; no one can predict the future) rarely see extreme cycles of prosperity or extreme downturns. If the conditions for "transformation" are met (for details on the topic of transformation, see the article from January 17 in Talking about Li and Talking about the Outside), it may even gradually trend towards a new trend similar to the slow bull market of the U.S. stock market. Of course, in this long-term development process, I believe that at least 90% of the current vast number of projects will die or go to zero, which is also a necessary path for the development of things.

If we discuss from the perspective of narratives, so far, among the hundreds of different narratives in the cryptocurrency market, it seems that only a few narratives such as DeFi (DeFi 3.0 mentioned in our previous articles), RWA, and Stablecoin have made relatively significant breakthroughs in adoption (including going mainstream), while others remain at the level of pure speculation or even pure air (this is mainly based on the perspective of industry development; in fact, speculation and air do not prevent people from making money in the cryptocurrency field; we need to view any issue dialectically).

In the first article of this year (2025), we mentioned that starting this year may herald the cryptocurrency field entering a new era, where some events or occurrences that disrupt our existing understanding may arise, and each of us will become participants and witnesses.

To briefly review, in the past 100 days this year, we have indeed seen many things that have disrupted our original expectations or understandings, such as: Xiaohongshu becoming a refuge for TikTok refugees, the U.S. president surprisingly launching a cryptocurrency with his wife, Deepseek unexpectedly igniting a new wave of AI development and impacting global computing power, the White House hosting a cryptocurrency summit, the U.S. Bitcoin strategic reserve (although currently only at the executive order stage), and the largest hacking incident in history (Bybit being hacked for $1.5 billion), and Trump's tariff war unexpectedly reopening… and so on.

Looking back, it seems that since the beginning of this cycle, investment logic has also begun to change slowly. Those purely speculative approaches are gradually shifting towards focusing on things or targets that can sustainably create value. From a certain perspective, this is also a sign that the cryptocurrency market is becoming more mature. Although speculation will always exist in every financial market, in the case of the cryptocurrency market, many past speculative theories (including valuation methods for altcoin projects) may be undergoing some subtle changes. For example, when various speculative narratives are repeatedly utilized and hyped, and when people become generally tired of PvP games (including scam games), some of the original effective methods will lose their effectiveness over time, unless the market can create larger (several times larger than before) FOMO factors.

In summary, the wild (or barbaric) era of the cryptocurrency market will eventually pass. The days when one could easily achieve returns of over 10 times by randomly buying altcoins during so-called bull markets are slowly fading away. The market will continue to retain the characteristics of cryptocurrency (Crypto), but it seems to be slowly evolving into a transitional phase similar to traditional financial markets, with liquidity continuously flowing from those without much investment skill to those who are technically savvy (individuals/institutions). However, in the long run, this is a positive development for the cryptocurrency industry.

Often, the end of a narrative phase also signifies the beginning of a new stage. We just need to grasp the present, look to the future, and continue to be patient.

That's all for today. The topics discussed seem a bit broad, and everyone can think about them from more dimensions. The sources of the images/data mentioned in the text have been added to the Notion of Talking about Li and Talking about the Outside. The above content is just personal viewpoints and analyses, intended for learning records and communication purposes, and does not constitute any investment advice.