Waiting for the battlefield of liquidity competition to shift to cryptocurrencies

Author: StarEx

During this period, A-shares and Hong Kong stocks have attracted the attention of the global capital market, and funds are playing games in the US stock market, Hong Kong stock market and other markets. StarEx exchange analysts believe that the liquidity of capital games has not benefited the crypto market for the time being, which is also the main reason for the sluggish market performance. Bitcoin is likely to adjust around the 50,000-60,000 US dollar mark for a period of time.

In today's globalized economic environment, financial warfare has become a key battlefield in the game between major powers. In the competition, countries strive to attract international capital to promote the industrial upgrading, market activity and employment improvement of their own economies. But capital is profit-seeking, and investors are always looking for markets with higher return potential around the world. Objectively speaking, the valuation of Chinese concept stocks, especially Hong Kong stocks, is lower than that of US stocks. In recent years, the Chinese concept stock market has undergone drastic adjustments, resulting in its valuation level being far lower than that of US stocks. This has also led to the violent rise of A-shares and Hong Kong stocks against the background of the Fed's interest rate cuts and China's rescue of the market.

The Fed cut interest rates and reduced market liquidity through a balance sheet reduction strategy. However, the liquidity of the US dollar did not increase significantly, and the market remained skeptical about whether the US economy would enter a recession. The best case scenario for the US economy is to achieve a soft landing. In this context, capital is naturally motivated to seek markets with higher returns, especially when global capital is re-looking for the best balance between returns and risks.

The Fed's interest rate cut policy has reduced the asset yields in the US market and pushed capital to other markets with higher potential returns. The current situation can be understood as a "capital battle" among global markets, in which markets with higher return potential tend to attract more capital inflows. This is also one of the reasons why A-shares and Hong Kong stocks have risen rapidly recently, while US stocks and cryptocurrency markets have been slightly weak.

At the same time, the cryptocurrency market is currently unable to occupy an important position in the global capital liquidity battle due to its relatively low total market value. Crypto assets can be regarded as an asset with US dollar risk. The current total market value is only about 2 trillion US dollars, which is not worth mentioning compared with the size of the US and Chinese capital markets. StarEx exchange analysts believe that investors' investment behavior in the cryptocurrency market is more out of attempts to explore the possibility of future returns. As global capital gradually seeks a balance between risk and return, the cryptocurrency market is also expected to benefit, but this process may take several months or even longer.

Although the total market value of the cryptocurrency market is relatively small now, it cannot be compared with the huge size of the US and Chinese stock and bond markets. However, with the changes in the global liquidity environment, the cryptocurrency market may also gradually grow into a new investment channel in the future. In the future global capital flow pattern, the crypto asset market may gradually gain the attention of mainstream institutional investors. StarEx exchange analysts believe that the current crypto market is mainly dominated by retail investors. However, as global investors gradually look for diversified investment targets, the attractiveness of the cryptocurrency market is expected to increase, especially after global capital looks for a balance between risk and return in the coming months or years.

The cryptocurrency market may gradually emerge as the battle for liquidity intensifies, which may take several months and more policy support. So the next few months are opportunities to buy on dips, looking at the long term.