How to Analyze Macro in Crypto Markets

Author: TraderS; Source: Twitter@Trader_S18

In fact, this article has been brewing for more than half a month, but because of various life and work trivialities, many of the views in the article have been published in short articles or replies recently, but I always want to string them together for a more systematic sorting. Recently, hot events have occurred frequently, and if I don’t publish it again, I may not have to publish it, so I will throw it out first and then slowly improve it later. If there are omissions, please be kind and pat it.

1.Why study macro

I haven’t written a macro analysis for a long time. First of all, the macro is called macro because the general direction will not change every day, just like water flows to lower places, and history will always go down along its established veins. Secondly, the macroeconomics has a certain time difference in market analysis, and whether you can make money, at least at the daily level. It is impossible to do short-term trading and high leverage. But it is definitely too arrogant to say that the macroeconomics has nothing to do with investment. If you see the development prospects of electric vehicles and AI a few months in advance and lay out Tesla and Nvidia stocks, you must have made a lot of money. Therefore, what we need to do is to keep the macroeconomic direction in mind, know the scope of the general trend, and see the key points of different currencies. Long and short signals can achieve unity of mind and hand. Now the world has come to the eve of the key node of interest rate cuts, which is a major event that will affect the macro and microeconomics, so it is very necessary to write a separate analysis article. Then we will analyze the world in early April as a snapshot~

Second,How to start analyzing the macroeconomics

When it comes to international relations, we can analyze from the perspectives of China-US, China-Russia, US-Russia, US-Europe, Russia-Ukraine, US-Ukraine, China-Japan, US-Japan, NATO Warsaw Pact, Palestine-Israel, US-Israel, US-Iran, Saudi-Iran, and so on.

When it comes to international macroeconomics, we should pay attention to international commodity prices (such as gold, oil, coal, and iron ore), as well as US stocks (Dow Jones), the US dollar index, power generation, electricity consumption, etc. All of the above indicators are the manifestations of the profound changes in the international situation. We must recognize that we are not rule makers. We are essentially still farmers who rely on the weather for food. We must adjust our strategies in time by observing the changes in these data to obtain a good harvest.

Combining international relations with the economy, we need to keep track of and understand the changes in bilateral and multilateral trade situations, especially the exchange of interests between countries.

Countries have naturally different resource endowments. Based on the comparative advantages of factors such as capital, energy, raw materials, labor, mechanical processing, and waterway transportation, countries have assumed different roles in the international system.

Many people say that the current situation is very similar to the Great Depression and Crisis of 1929. It is not only an economic and financial crisis, but also a feeling of war in various hot spots around the world. What are people fighting for in this world of great contention? They are fighting for resources, discourse power, development rights, survival rights, pricing rights, and currency issuance rights. We happen to live in a rare period of stability after the end of World War II and the Cold War. This period of stability is already very long in the long river of human history. The increments in various dimensions brought about by China's reform and opening up have extended this peaceful period by at least 30 years. But now the dividends are exhausted, and the single hegemony of the United States is gradually approaching the time of disintegration.

Three,The basic pattern of the world today

No matter where you are on the political spectrum, no matter whether your political stance is left, center, or right, even if you exclude your inherent subjective stance as a Chinese, you cannot deny that China and the United States are the dual cores of the world today, and Sino-US relations are currently the bilateral relationship with the greatest impact on the world. Therefore, we will analyze more with China and the United States as the main line, so that at least you can naturally understand half of it and it is easier to get started.

The biggest difference between China and the United States is the top-down system. The United States is a monetary and financial country, commonly known as playing with money, while China is an industrial production country, commonly known as screwing. Since the collapse of the Bretton Woods system, the US dollar has been mainly tied to oil as an anchor, and now this anchor has become very loose. There is a trend of becoming a RMB system with industrial products as anchors. The contradictions in the world today are the new industrial capital represented by China VS the traditional financial capital represented by the United States, China's industrialization capabilities VS the deindustrialization of the United States, and the industrial product RMB system VS the oil military technology dollar system. And the two countries are not a single iron plate. There are red and blue disputes in both China and the United States, which will not be discussed here for the time being.

The popular concept of hypertension vs. hypoglycemia actually started with the decoupling and chain-breaking of the Trump trade war. It means that although the United States has been raising interest rates, it still cannot curb high inflation. Although China has been constantly stimulating domestic demand and opening up new markets, it is still inevitable to have overcapacity. Even BYD has launched an electric car at a shockingly low price of 7.98. Then you, the smart one, might say that if China's low-priced products are brought to the United States, and the over-issued currency of the United States is used to send to China, wouldn't it be a self-solution of the dilemma? With a large supply of cheap industrial products in the United States, inflation will immediately drop, and with the large market of the United States, China's overcapacity will also be solved immediately. Because both countries know that this is a poison to quench thirst, and can only solve the problem in the short term, but if it continues to raise a tiger to cause trouble, when the US military advantage is completely lost, then it will not be as simple as high inflation. The United States will definitely be driven down from the frozen throne, so it must take advantage of the strategic advantage to contain and try to interrupt or delay China's industrialization. This is why there are a series of containment measures such as decoupling, chain-breaking, chip sanctions, etc. with allies and younger brothers.

Since China joined the WTO in 2001, the abundant and well-educated labor force, coupled with the hard-working, savings-loving and education-focused factors of the East Asian Confucian civilization circle, has exploded with huge productivity. In the era of big machines, China's productivity alone is enough to supply the world's industrial products, and there is still a surplus of labor, which is why there is a 35-year-old crisis. With China as a long-term worker, the landlord, the United States, gradually put its weapons into storage and let its horses go to the mountains. Its industrial capacity has been reduced year by year, from the initial comprehensive defense to key defense (only retaining the military industry), and even the key defense cannot be guaranteed. If you have seen the Empire State Building and the Brooklyn Bridge in New York, you will be amazed that Americans actually had such a strong industrial capacity 100 years ago. It is no accident that they became kings after World War I, World War II and the Cold War. But if you see the sewage flowing in the New York subway and rats running around, you will also sigh that things are impermanent. If you see that in recent years, even the F22 production line has been dismantled, the F35- is oversized and overspent, the Arleigh Burke Ticonderoga is aging, and the Ford electric missile has taken the wrong technical route, you will understand that the empire's last bit of industrial fig leaf is also running out. Otherwise, even the 155mm howitzer shells on the Russian-Ukrainian battlefield would not be able to be supplied in sufficient quantities, and they would eventually be forced to abandon Ukraine. The all-round three-dimensional capital war between China and the United States has actually entered a strategic stalemate.

The Russian-Ukrainian war, which was catalyzed by the United States and NATO's continuous extreme pressure, was actually a civil war that was delayed for 30 years after the disintegration of the Soviet Union to resolve the contradictions that were not handled clearly at the time. This is like a village tyrant constantly teasing the second fool at the head of the village. If it were not for the United States and NATO's continuous pressure to the east, forcing a stubborn country like Maozi to retreat, the war would not have broken out. You can say that the Russians are invaders, which is understandable from the perspective of international law, but it's like a person who keeps yelling at you and spitting at you, and sends his minions to hang around your door every day, but you can't do anything about it, because if you do, it's all your fault. What can you do at this time? Adults only look at the results. The actual effect of the Russian-Ukrainian war and the bombing of the Nord Stream pipeline is that France, Germany and Russia, which have a basis for cooperation and are already close, are gradually drifting apart. Europe has lost its cheap and reliable energy supply, which is very helpful in driving European capital and industry into the United States.

Yellen visited China and talked a lot about the treatment of workers with overcapacity. Does a US Treasury Secretary really care so much about the Chinese proletariat? She just wants to continue the US's industrial relocation to China (Apple's Indian factory accounts for 25% of its production capacity) and technological blockade (chips below 7nm) to accelerate the return of industry and capital to the US.

In fact, it is not just China and the United States, but all countries in the world are plagued by problems, and every family has its own problems.

1. China's problems, the collapse of the real estate market, the serious aftermath of the 4 trillion yuan in 2008, and the sharp decline in residents' consumer confidence. This is why there are self-help measures to stimulate domestic demand such as Zibo barbecue, Harbin ice and snow, and Tianshui Malatang.

2. The problem of the United States is that its industry is hollowing out and its artillery production capacity is insufficient. If a ship is broken and there is no dock to repair it, it has to wait for a repair. If a bridge is hit, it still has to wait for a repair. 3. The problem of Russia is that it is deeply mired in the sequelae of the disintegration of the Soviet Union. The Russia-Ukraine war is equivalent to the Soviet civil war, but the Russia-Ukraine war has prevented the Russian oligarchs from sucking blood. The more they fight, the more excited they are, and the more they fight internally, the smoother they are.

4. The scandal of the British royal family. If not handled properly, the Commonwealth will face disintegration. 5. The immigration of blacks to French colonies has changed the population structure and public security.

6. Germany, a defeated country, has limited autonomy. It dared not say anything even after the bombing of Nord Stream, which increased industrial costs and reduced competitiveness.

7. Japan, a defeated country, even though it has long entered the ranks of developed countries, has its surplus value plundered. People work very hard and the development results do not match the actual living standards

8. South Korea is a semi-colony, and there are conflicts between chaebol agents and ordinary people

9. Southeast Asia has no autonomy and can only lean towards one side, either the south or the north

10. Israel is surrounded and can only win all the time. If it loses once, it will be doomed

11. India has a caste system and the interests of local states are inconsistent

12. Asia, Africa and Latin America, represented by Sri Lanka, Turkey and Argentina, are repeatedly testing the edge of thunder

And so on, there may really be only one way to solve all the above problems. . . But we all don't want to see

Fourth,Commodity prices rise

International crude oil has soared since March 11, which is due to the increase in demand for world economic recovery, the deterioration of Palestinian-Israeli relations causing shocks in the Middle East, and the panic caused by the Yemeni Houthi armed forces claiming to cut off the Red Sea transportation line. But the deeper reason is still the combined force of the common interests of OPEC and the United States and Russia. Oil countries need to make money, the United States needs to rely on oil to anchor the US dollar, and the inflation temporarily suppressed by inventory during the epidemic needs to be purchased and replenished.

The United States kicking Russia out of the SWIFT system is actually a stupid move that hurts the enemy by 1,000 and hurts itself by 800. It seems to be a temporary pleasure, but the best deterrent of a nuclear bomb is to stay on the launch pad. After the financial nuclear bomb was detonated, it seemed to improve its reputation among its allies for a while, but it did not have much practical effect. The Ukrainian side is still at a disadvantage in the Ukrainian-Russian battlefield. Currency hegemony needs physical support. Russia's use of RMB for settlement of so many resources, especially oil, is a major damage to the US dollar system. The market share of the US dollar has suddenly given up and dropped by a large amount that is difficult to make up. This behavior has invisibly benefited the virtual currency market. Russia has to steal virtual currencies such as BTC for some international trade. This move has increased the market share of virtual currencies and led to an increase in the price of Bitcoin.

Some parties to the Russian-Ukrainian conflict do not want to cease fire. The United States and NATO do not need to do low-end operations such as terrorist attacks. The Ukrainian far-right Azov Battalion and other organizations are the biggest suspects. Russia has not said that the United States is behind it. ISIS has jumped out to take the blame and is not recognized. NATO claims to be blind but is actually bluffing to show its presence. It can't even take out 155mm howitzer shells and has to transfer Japanese and Korean stocks. Without actual support, the war is no longer sustainable. In the future, either a ceasefire or at most a small-scale conflict on the line of actual control will continue.

Gold's safe-haven function has been deliberately suppressed by the US dollar for more than a decade, and now it is taking back its position as the king of currencies. People in the currency circle can understand the surge in gold prices. Assuming that the left side of the Gold/USD trading pair has surged, is it possible that the value of the denominator on the right side has decreased? In other words, assuming that the actual price of gold has not changed, but the US dollar has depreciated by a quarter, then the nominal price of gold has naturally increased by a third. 1/three quarters = 1.333, right?

Whether Bitcoin is gold or stock has always been controversial, but it is not controversial to say that Bitcoin is a commodity. Commodities have prices and supply and demand relationships, and prices are determined by supply and demand relationships. When the war started, panic selling caused an increase in supply and a sharp drop in the first place. After the war changed the supply and demand relationship, the additional demand increased and the supply decreased relatively, which led to price increases.

V.Let's sort out the impact of oil prices on the world

1. Increase the use of US dollars, control over-inflation but drive inflation in basic industrial products, the two effects basically offset each other and temporarily maintain balance

2. It is conducive to the overseas expansion of new energy industries such as electric vehicles

3. The rise in oil prices attracts Republican supporters and oil capital, which is conducive to the country's shale oil industry

VI.The impact of the Israeli-Palestinian conflict:

1. The attitude of Islamic countries in the Middle East, especially the attitude of oil-producing countries, is very important to the US dollar system

2. The historical reconciliation between Saudi Arabia and Iran has caused the offshore balancer of the United Kingdom and the United States to lose control

5. The rising cost of government bonds will also lead to fiscal tightness. For example, there is no money to repair the Baltimore Bridge due to aging infrastructure, and charging stations cannot be built.

6. If the United States does not cut interest rates in 2024, even the deus ex machina cannot be solved. It needs a fairy from the sky. The fundamentals cannot withstand this high interest rate state. 7. Because Trump has spent too much money on the new crown crisis since he came to power, if interest rates are not raised, the real inflation will explode, and the regular interest rate hikes and cuts are all regular harvest routines.

8. In fact, the world is in a difficult situation. Think about it, in China, where there is no shortage of physical goods supply, economic life and job hunting have been difficult in the past two years. What about countries with weaker resistance? Only Sri Lanka exploded in this round, which is far from enough to fill the gap. 9. Employment has deteriorated. The employment rate cannot be judged only by the data of the Ministry of Labor. I believe everyone has seen the news of layoffs in Google, Amazon, Microsoft, etc. If you have acquaintances in the United States, you can also inquire about the actual difficulty of finding a job. The non-farm data can be used to split a high-paying job into several zero-paying jobs, just like if you were laid off by Alibaba and have to deliver food or drive for Didi, the employment rate may have increased on the surface and the economy seems to be good, but in fact the economy is already very bad.

10. In fact, it is difficult to continue raising interest rates now. The recent voices of no interest rate cuts in 2024 are to hedge market sentiment.

11. In order to win the election, there will be further collusion.

12. Non-US currencies are relatively depreciating due to the interest rate gap. Interest rate hikes are originally a strong cycle for the US dollar, but the US dollar has already increased to this extent. The US dollar index is only maintained at around 105, which is really not high. According to the Fed’s previous forecast, it is normal to pull it up to above 115-120. 13. The world is fair. The Cold War dividends are numb. The bourgeoisie has degenerated and the welfare is gone. The proletariat is lazy and does not want to work. They have deindustrialized. At first glance, aircraft carriers and destroyers are all outdated.

14. Decoupling and chain breaking have led to over-issuance of currency. There is no solution to inflation without goods to support it. 15. China and the United States have adopted the other side’s countermeasures. The United States will revitalize the Rust Belt industry and use its chip process advantages to slow down China’s industrial upgrading. China wants to strive for the internationalization of the RMB and break the chip blockade. Both sides eventually changed their limit and became what they once hated.

VIII. Expected rate cut rhythm

1. The rate cut will not be too much. 25 basis points each time, assuming it will be reduced to 3% in 3 years, 550-300=250/25=10, fans can think of your ideal formation, 343, 352, 253, whether it is attack or defense.

2. The rate cut may cause China to use the Star Absorbing Method, because infrastructure and industry can absorb a lot of funds, so before the rate cut, China's industry must be hit first. Apple's relocation to India is very serious, so Apple's market share is also declining after being counterattacked, so there is Cook's trip to China to show goodwill, but it cannot change the trend.

3. Therefore, the United States has banned US dollar capital investment in China in advance since last year. Biden signed an executive order to restrict investment in China in order to prevent capital from flowing into China after the interest rate cut, causing China to continue to have hypoglycemia.

IX.Recent world line convergence

3.15 Russian election, Putin's re-election without suspense stabilized Russia. Compared with the uncertainty of the US election at the end of the year, the sooner the stability, the more first-mover advantage

3.18 US congressmen openly wrote to Powell asking the Federal Reserve to set a clear timetable for interest rate cuts

3.19 Japan raised interest rates and the yen depreciated

3.22 Switzerland cut interest rates and the US dollar appreciated

3.23 TikTok was funded by the US House of Representatives hearing (later due to Tiktok, the extremely tense Sino-US relations also eased due to the visit of business and academic circles to China)3.23 Russian concert hall terrorist attack

3.26 The Security Council passed a resolution for the first time and clearly demanded an immediate ceasefire in Gaza

4.1 Israel bombs Iranian embassy in Syria

4.2 Chinese and American leaders talk

4.4-4.9 Yellen visits China

4.7 Israel withdraws from Gaza

4.8 Lavrov visits China

4.8 Kishida Fumio visits the United States, let's see if it is Plaza Accord 2.0 or Japan-US Security Agreement upgrade

4.13 Iran retaliates against Israel

4.14 German Chancellor visits China

Hotspots such as the China-Philippines conflict in the Taiwan Strait also have the risk of war, but it is far lower than the powder keg in the Middle East

Ten.The impact of interest rate cuts on the cryptocurrency circle

1. We are simply hoping that the additional liquidity brought about by the interest rate cut can overflow into the cryptocurrency circle to pull up the market

2. After the interest rate cut, we will start to speculate on the frequency, rhythm, and points of interest rate cuts following the U.S. stock market

3. The role of the Federal Reserve is to flatten the peaks and fill the valleys, and the same is true for the Bitcoin ETF. The existence of large machine easing will reduce volatility

4. The influence of the Federal Reserve's interest rate cut and Bitcoin halving is not at the same order of magnitude, at least three levels apart. The halving of Bitcoin is just a self-motivated move by people in the cryptocurrency circle, which can only change the supply and demand relationship of Bitcoin or the cryptocurrency circle at most. Even so, as the proportion of incremental growth decreases after multiple halvings, the marginal utility will also decrease. But what the Fed has changed is the global money supply and demand

XI.The relationship between macro and technical aspects

1. Macro is about ideals and the distance, while short-term is about the ground and life

2. Don’t rush in with passion after reading the macro, and then feel scared that it is about to explode within two hours

3. We can neither be separated from the torrent of the times nor from making money

4. The macro affects the general direction and node landmark events, and it is difficult to achieve hourly accuracy

5. The macro and micro are like wave-particle duality, both of which exist at the same time and are indispensable

6. Never look at the world with the mindset of "The End of History" We must always look at the world with the perspective of sustainable development. The world will not end because of a big rise tomorrow

8. Before the end of China's foreign exchange control, virtual currency compliance is impossible

9. Analogous to the United States, the largest industrial country before the attack on Pearl Harbor in World War II, as long as China, the largest industrial country now, does not intervene in this season, S3 will not start. For their own interests, China and the United States will not actually engage in a full-scale hot war. There is no need to worry about it. Although Qi Ren was really hit by a meteor and was worried, you can't lose your mind about work and life because of a low-probability event such as a meteor impact. It is the right way to keep your heart in your stomach, live well every day, and do every transaction well.