The underlying reason for the current fluctuations in the crypto market: anxiety over the value rise after BTC breaks new highs

This week we will explore an important point that may explain the recent severe fluctuations in the market. After the BTC price broke new highs, how to continue capturing incremental value has become a key issue. I think the focus is on observing whether BTC can replace AI as the core driver of economic growth in the new political and economic cycle in the United States. This game has already begun with the wealth effect of a certain company, but the entire process still faces many challenges.

The market begins to speculate whether more listed companies will allocate BTC to achieve rise.

Last week, the crypto market experienced severe fluctuations, with BTC prices swinging widely between $94000 and $101000, mainly for two reasons.

First, on December 10, a certain tech giant officially rejected the "Bitcoin Financial Proposal" put forward by a think tank at its annual shareholder meeting. The proposal suggested investing 1% of total assets in BTC as a potential means of hedging against inflation. Previously, a certain encryption entrepreneur also claimed through social media that he conducted an online presentation as a representative of the think tank, leading to certain expectations in the market regarding the proposal, although the board had clearly recommended rejection beforehand.

The think tank was established in 1982 and is headquartered in Washington, D.C. It holds a certain position among conservative think tanks, particularly in supporting free markets and opposing excessive government intervention. However, its overall influence is limited and it is relatively small in scale. The organization has faced criticism for its stance on issues such as climate change and has been accused of having ties to certain industries, which has weakened its influence in the broader political spectrum. In recent years, the think tank has frequently proposed initiatives at shareholder meetings of publicly listed companies, questioning the policies of large enterprises on issues like diversity. With the appointment of a certain political figure and their supportive stance towards encryption, the organization has begun promoting Bitcoin adoption to major publicly listed companies.

After the proposal was officially rejected, the price of BTC once fell to $94,000, and then quickly rebounded. From the extent of the price fluctuations triggered by this event, the current market is in a state of anxiety, with the focus on new sources of rise for BTC after it broke its historical high. We see that some key figures in the encryption world are leveraging the wealth effect of a certain company to promote the strategy of allocating BTC in the balance sheets of more listed companies, in order to combat inflation and achieve performance growth, thereby increasing the adoption of BTC. Next, we will explore whether this strategy could be successful.

BTC still has a long way to go to become a global store of value.

First, analyze whether the strategy of using BTC to combat inflation is feasible in the short term. When it comes to combating inflation, gold usually comes to mind. So can Bitcoin replace gold and become a global store of value?

This issue has always been a key point in discussing the value of Bitcoin. I believe that in the foreseeable four years, or rather in the short to medium term, this vision is not easy to achieve, and therefore it lacks attractiveness as a short-term promotional strategy.

The reason why gold can become a store of value is primarily based on the following points:

1. Unique physical characteristics make it an important decoration with practical value.

2. Scarcity gives it financial attributes, making it an easy class symbol.

3. The widespread distribution and lower mining difficulty globally enhance the cultural dissemination of its value.

These attributes have allowed gold to serve as a currency in human civilization for a long time, forming a robust intrinsic value. Even after sovereign currencies abandoned the gold standard, gold prices have still largely followed the long-term rise pattern, reflecting the actual purchasing power of money.

However, it is not realistic for Bitcoin to replace gold's status in the short term, mainly for two reasons:

1. The value proposition of Bitcoin is top-down: its mining requires computational power competition, which depends on electricity and computational efficiency. This results in the acquisition of BTC being concentrated in a few regions, hindering the spread of its value proposition globally. For underdeveloped countries that lack competitive advantages, it is difficult to obtain BTC, and they may become subjects of exploitation, thus making it hard to gain recognition.

2. Globalization regression and challenges to the dollar hegemony: The return of a certain political figure may promote isolationism, undermine globalization, and affect the dollar's position as the global trade settlement currency. This will hit the demand for the dollar in the short term. As a currency primarily priced in dollars, the acquisition cost of Bitcoin may rise, increasing the difficulty of promoting its value proposition.

These factors have led to high volatility in Bitcoin prices in the short term, primarily based on speculative value rather than an increase in the influence of its value proposition. Although the excessive issuance of the dollar may give Bitcoin some anti-inflationary properties, this is not enough to make it more competitive than gold in terms of value storage.

Therefore, focusing on anti-inflation as a short-term promotion priority makes it difficult to attract "professional" clients to choose to allocate BTC instead of gold, as this would expose their balance sheets to extremely high volatility. It is expected that large listed companies with stable business development will not aggressively choose to allocate BTC to cope with inflation in the near future.

BTC is expected to become the core driver of economic growth in the new political and economic cycle.

Next, let's discuss the second point: some publicly listed companies with weak growth are achieving overall revenue growth and driving up market value by allocating BTC. Whether this financial strategy is likely to gain broader recognition is the core issue in determining whether BTC can achieve new value growth in the short to medium term, and it is relatively easy to achieve in the short term. In this process, BTC may take over from AI and become the core driver of economic growth in the new political and economic cycle.

We have analyzed the successful strategy of a certain company: converting the rise in BTC value into revenue growth for the company's performance, which in turn boosts market value. This is indeed very attractive for companies struggling with growth. Many declining companies, with their main business revenue rapidly decreasing, ultimately choose to allocate their remaining value using this strategy to preserve opportunities for themselves.

After a certain political figure returns, their internal reduction policies will significantly impact the structure of the U.S. economy. Let’s look at a piece of data: the Buffett Indicator for the U.S. stock market. This indicator measures the ratio of total market capitalization to GDP, determining whether the overall stock market is overvalued or undervalued. A range of 75% to 90% is considered reasonable, while over 120% indicates that the stock market is overvalued.

The current Buffett indicator for the US stock market has exceeded 200%, indicating that the US stock market is extremely overvalued. Over the past two years, the core driving force preventing the US stock market from correcting due to tightening monetary policy has been the AI sector. However, with a certain tech company announcing its third-quarter financial report showing a slowdown in revenue growth, and a potential further slowdown in the next quarter, this is clearly insufficient to support such a high price-to-earnings ratio. Therefore, the US stock market will face significant pressure in the near future.

For a certain political figure, their economic policies are filled with uncertainty in the current environment. For example, a tariff war may trigger internal inflation, cuts in government spending may affect corporate profits and lead to a rise in unemployment, and lowering corporate income tax may exacerbate the fiscal deficit. Additionally, their determination to rebuild internal ethical and moral standards in the United States may lead to strikes, protests, and other issues, while a reduction in illegal immigration may also result in labor shortages, all of which will impact economic development.

Once economic issues arise, ( specifically referring to a stock market crash in the currently highly financialized United States, it will severely impact its approval ratings, thus affecting the effectiveness of internal reforms. Therefore, it is crucial to implant a controllable core that drives economic growth into the U.S. stock market, and Bitcoin may be a very suitable choice.

Recently, the "certain political figure's trades" in the crypto world have fully demonstrated his influence on the industry. Moreover, the companies supporting him are mostly traditional local industries, not tech companies, and did not directly benefit from the previous wave of AI. If the situation develops in the direction we described, things will be different. Suppose small and medium-sized enterprises in the United States begin to allocate Bitcoin reserves on their balance sheets; even if their main business is affected by external factors, the certain political figure only needs to advocate for some crypto-friendly policies to stabilize the stock market to some extent. This targeted stimulus is highly efficient and can even bypass monetary policy, making it less susceptible to establishment constraints.

Therefore, in the new U.S. political and economic cycle, this strategy is a good choice for certain political figures' teams and many small and medium-sized enterprises in the U.S., and its development process is worth paying attention to.

![In-depth analysis of the underlying reasons for the current fluctuations in the crypto market: Value growth anxiety after BTC hits new highs])https://img-cdn.gateio.im/webp-social/moments-ac1c481c6628e917f65462a956323f09.webp(