Shift in Monetary Policy and the Prospects of a Bitcoin Bull Run

Recently, after the end of the summer holiday in the Northern Hemisphere, I turned to the Southern Hemisphere to spend two weeks skiing. Most of the time was spent backcountry skiing, which requires first attaching climbing skins to the bottom of the skis to ascend, and then removing the skins and switching to downhill mode to enjoy the powder snow after reaching the top.

A typical skiing day consists of 80% uphill and 20% downhill, resulting in a huge energy expenditure. My basal metabolic rate is about 3000 kilocalories, and with the energy required for exercise, the total daily expenditure exceeds 4000 kilocalories. For this reason, I prepare a hearty breakfast and consume some high-sugar snacks every 30 minutes during skiing, while also regularly taking in "real food" that is rich in protein and carbohydrates.

This dietary strategy has led to discussions about the relative importance of price and quantity in monetary policy. The price of money is like candy that provides quick energy, while the quantity of money is like "real food" that burns slowly. At last Friday's central bank meeting, the Federal Reserve, Bank of England, and European Central Bank all indicated that they would lower policy interest rates.

After Powell announced a policy shift, risk assets generally rose. However, this may lead to an appreciation of the yen, triggering risks in yen arbitrage trading. The changes in the USD/JPY exchange rate indicate that interest rate cut expectations have begun to affect the foreign exchange market.

Despite the economic data not supporting a rate cut, the Federal Reserve seems determined to provide "sugar stimulation" for the financial markets. This may be due to political considerations to maintain the stock market's rise. However, if the yen appreciates too quickly, it may be necessary to offset the negative effects by expanding the balance sheet.

In the coming months, global central bank interest rate cuts and a stronger yen will be key factors. If the USD/JPY exchange rate quickly falls below 140, the Federal Reserve may have to take more aggressive easing measures. For cryptocurrency holders, the current monetary environment is favorable, but potential risks should still be monitored.