Analysis of the Crypto Market and Macroeconomics Amidst Global Turbulence

Recently, the global economic situation has been unpredictable. Although the crypto market is currently in a relatively calm period, this actually provides us with an opportunity to examine the macroeconomic environment. After all, the development of digital assets such as Bitcoin is closely linked to overall economic trends.

Currently, the crypto market seems to have entered a "wait-and-see phase". Most investors have already built their positions, and adopting a wait-and-see strategy may be wiser. For ordinary investors, maintaining a long-term investment perspective can simplify the decision-making process and reduce the need for frequent adjustments. At present, holding long-term or investing in emerging tokens may be a more viable option.

Although the crypto market is temporarily calm, the macroeconomic environment is worth exploring in depth. Today, we will focus on two closely related important economic events:

1. China significantly reduces its holdings of U.S. Treasury bonds and agency bonds
2. The United States has announced a significant increase in tariffs on Chinese imported goods.

For a long time, China has been a major holder of U.S. Treasury bonds, with its holdings reaching up to 10% of the total U.S. Treasury debt. The reasons for China purchasing U.S. Treasury bonds include:

• U.S. Treasury bonds are considered one of the safest investments in the world, with low risk and stable returns.
• Invest the large amount of dollars earned from exporting to the United States to obtain interest income.
• Maintain the stability of the RMB exchange rate and keep export competitiveness by purchasing U.S. Treasury bonds.

However, recently China has begun to significantly reduce its holdings of U.S. debt. Reports indicate that China sold a record amount of U.S. Treasury and agency bonds in the first quarter. This move has had multiple impacts on the U.S.

• Increased supply of US Treasuries leads to falling prices and rising interest rates.
• The cost of U.S. government debt increases
• May affect the USD exchange rate, thereby impacting the China-US trade balance.

In response, the United States may take the following measures:

• The Federal Reserve restarts quantitative easing policy
• Require banks and other institutions to increase their holdings of government bonds
• Increase government bond yields to attract investors

At the same time, the U.S. government announced a significant increase in tariffs on imports from China. The new policy raises the tariff on electric vehicles to 100%, triples the tariffs on lithium batteries, steel, and aluminum products, and doubles the tariffs on semiconductors and solar panels. Additionally, new tariffs are imposed on critical minerals, magnets, cranes, and medical products.

This measure aims to increase the prices of Chinese goods in the U.S. market, encouraging consumers to purchase American-made products. However, the U.S. currently lacks sufficient production capacity to replace imports from China. To boost domestic production capacity, the U.S. may need to implement fiscal stimulus policies, which could lead to more currency issuance and government debt.

For the crypto market, these macroeconomic changes may have the following impacts:

• The global economic slowdown may reduce disposable income for investing in cryptocurrencies.
• Government fiscal stimulus and currency issuance may increase, enhancing Bitcoin's appeal as an inflation hedge.
• Governments around the world may weaken their regulation of encryption, especially regarding Bitcoin.
• In the long run, if the US dollar depreciates due to increased debt and expanded money supply, Bitcoin may benefit as an alternative currency.

Overall, although the current crypto market is relatively calm, changes in the global economic environment may create new opportunities for the long-term development of digital assets. Investors should closely monitor macroeconomic trends while maintaining a long-term investment perspective.