The Era of Liquidity-Dominated Speculation has Arrived

The current economic environment is showing irrational characteristics, and speculative behavior is becoming increasingly common. The fiscal and monetary policy tools that were previously used to maintain market stability seem to be ineffective:

• The United States maintains a 7% GDP deficit during full employment.
• The interest rate reaches 5%, but Bitcoin is close to its historical high.
• Even during periods of economic "prosperity", stimulus measures are still ongoing.

The market no longer reflects the fundamentals, but rather the liquidity situation.

Bitcoin Frenzy: A Rational Phenomenon in Turbulent Times?

The rise of Bitcoin no longer depends on a weak economy or interest rate cuts. The most favorable macro environment may be one with no new shocks and continuous improvement in liquidity.

Liquidity is surging:

• The global M2 money supply remains high and may have peaked.
• If Bitcoin rises by 10%, over 1.3 billion USD in short positions will be liquidated, indicating ample market liquidity.
• Bitcoin typically peaks 525-530 days after halving, with late September 2025 possibly being a critical point.

Based on the historical halving cycles, there are analyses that provide a clear roadmap:

Liquidity-driven cycle: Bitcoin performs strongly when M2 is growing. Currently, M2 is showing a double top, with the second peak lower than the first.

Top Time Prediction:

• 525 days after the halving in 2013
• 530 days after the halving in 2017
• 2021: 518 days after the halving
• September 21, 2025

Expected top range:

Bitcoin may reach $135,000 to $150,000

But the upward space may be restricted by macro tightening policies.

Key conclusion:

September may rebound, and then may pull back due to Liquidity.

In the context of distorted fundamentals and Liquidity dominance, market participants are adapting.

Macroeconomic Analysis Update ( as of August 3, 2025 )

Summary of Macroeconomic Events This Week

Bitcoin Heat Index

Banking and Regulatory Dynamics:

• The U.S. Securities and Exchange Commission launches the "Crypto Initiative" to strengthen regulation and enhance the U.S. digital finance leadership.
• A payment platform launched "cryptocurrency payment", allowing American businesses to accept 100 types of cryptocurrencies.
• A payment company expands its stablecoin settlement capabilities, adding support for tokens and blockchains.
• A certain cryptocurrency has reached a historic high, driven by institutional demand and influx of corporate funds.

Institutional Investment and Project Development:

• A certain company submitted a $1 billion securities declaration, becoming the largest holder of TRX.
• A certain company acquired $739.8 million in Bitcoin, increasing its holdings to $43 billion, and launched a preferred stock IPO.
• A stablecoin company reported a Q2 profit of $4.9 billion, with strong demand for Bitcoin and gold.
• A certain company acquired $295 million worth of Ethereum, becoming the second largest holder, with a position of 438,017 ETH.
• Launch of a learning, contribution, and reward center for a certain ecosystem

NFT and Digital Collectibles Market:

• NFT sales surged to $574 million in July, the second highest in 2025, driven by demand from large holders.
• The floor price of a certain NFT project reached $208,000, setting a new three-year high, driven by the rise of Ethereum in the market.

Market Overview

U.S. Economy: Signs of Slowing Widen

• This week's data shows that the momentum of economic growth in the United States has sharply slowed in the first half of the year.
• Changes in consumer behavior, tightening of credit card usage reflects an increase in uncertainty.
• Housing affordability hits a record low: mortgage rates and holding costs surge, consuming 53% of middle-class income on average.

Global central banks: Diverging policy paths

• Some central banks kept interest rates unchanged, while Chile and South Africa lowered rates by 25 basis points in advance due to slowing inflation.
• Eurozone Q2 GDP slightly exceeded expectations, core inflation remains stable, the European Central Bank will maintain caution.
• China's July PMI weakened, with the economic recovery fading faster than expected, which may drag down regional demand and supply chains.

Federal Reserve: The Dilemma of Data Dependence

• Maintained the interest rate at 4.25%-4.50% for the fifth consecutive time, reinforcing a cautious stance.
• The September meeting may adjust interest rates, but it is not certain that there will be a rate cut; clearer evidence is needed.
• The outlook depends on the depth of the economic slowdown and whether inflation continues to ease without triggering a recession.

Key Economic Indicators

US-Japan Agreement

New tariff agreement: lower than the threat but still high

• The United States imposes a 15% tariff on all imported goods from Japan, up from the previous 10%, and far higher than the 2.5% at the beginning of the year.
• Tariffs on automobiles and parts have been reduced from 27.5% to 15%, driving up Japanese car stocks and the stock market.

Inflation risk comes from rising import prices.

• A 15% tariff will raise consumer prices on Japanese goods, increase inflationary pressure, and weaken the purchasing power of American families.
• A broader shift in trade policy may further increase import costs in other regions.

Japan's $550 billion investment commitment: terms unclear

• Trump claims Japan will invest $550 billion in the U.S., with 90% of the profits going to the U.S.
• The Japanese representative refers to the upper limit non-guaranteed amount, expecting the United States to share the risks and financing.
• The lack of a written agreement raises questions about enforceability, laying the groundwork for future disputes.

U.S. manufacturing push faces labor constraints

• The agreement aims to move more manufacturing to the United States, but there are doubts about filling positions due to labor shortages and tightening immigration policies.
• This contradiction undermines the strategy of reducing trade deficits through repatriation.

Automotive industry rebound: Unfair competition American automakers face higher costs than Japanese importers:

• 25% tariff on imported components
• 50% tariff on imported steel and aluminum
• Complex tax refund process under the North American Free Trade Agreement

Industry leaders warn that the agreement favors Japanese manufacturers and workers over those in the United States, expressing concerns that it sets a precedent for future trade agreements.

Agreement in Doubt: Negotiation Rather Than Contract Signing

• No formal treaty has been signed; both parties have differences in the interpretation of the terms.
• Trigger widespread concerns about America's reliance on non-binding trade commitments, which may erode trust and stability in future negotiations.

Job market

New graduates are facing an unprecedented recruitment slump.

• The unemployment rate for recent college graduates has reached a 10-year high, only one percentage point lower than all young workers.
• Historically, the employment prospects for university graduates have been far better than their peers, and this convergence serves as a warning signal for the white-collar employment trend.

AI is not the main reason, at least not for now.

• Although generative AI has been blamed for eliminating entry-level jobs, its impact remains limited to specific industries.
• Broader measures are still insufficient to explain the general weakness in graduate recruitment.

Policy uncertainty cools the market.

• Trade policies, the direction of Federal Reserve interest rates, and uncertainties surrounding immigration restrictions may hinder corporate hiring, especially for technical positions.
• This uncertainty also affects employee behavior, with a low turnover rate, reflecting the hesitation to change jobs in an unstable market.
• A decrease in resignations = a decrease in job vacancies, leading to a slowdown in labor market mobility.

Relief of skilled labor shortage

• The long-standing shortage of university graduates, which was a key driver of high wage premiums, is weakening.
• As more workers enter the tech labor pool, wage premiums tend to flatten or decline, which may further suppress the creativity of traditional high-growth industries.

India Focus

UK-India Trade Agreement: A Significant Non-US Shift

• The UK and India have reached a landmark trade agreement, cutting tariffs on over 90% of British exports to India.
• The UK expects a 60% increase in exports to India by 2040, benefiting from the rapidly growing Indian market access.

Big Winner in the Automotive Industry

• India has reduced the import tariff on cars from 100% to 10%, a dramatic change that could reshape the automotive market.
• But the quota limits the total amount of imports, suppressing the short-term business profits of British car manufacturers.

India benefits significantly Despite the news focusing on the growth of UK exports, India benefits more from its own tariff cuts:

• Consumer prices decrease
• Domestic competition intensifies
• The global competitiveness of Indian enterprises has increased

These structural advantages may enhance India's long-term export capacity and productivity.

India exempts 50% of export goods to the UK from taxes. Among the Indian export goods that previously faced tariffs of 4%-16%, about 50% will enter the UK duty-free, supporting Indian exporters in textiles, pharmaceuticals, and food.

Strategic Trade Restructuring

• The agreement reflects global trends: as U.S. tariffs disrupt existing trade patterns, countries are attempting to diversify partnerships.
• India is actively seeking trade liberalization with the EU, ASEAN, and even the United States, positioning itself as a key player in the post-globalization reset.

Summary

The core characteristics of the era of hyper-speculative capitalism are liquidity-driven, finance-led, and a market deviation from traditional economic logic. The Bitcoin frenzy, the restructuring of trade patterns, and the evolution of the labor market are all reflections of this era. Investors and policymakers need to adapt to the new reality and flexibly respond to the challenges posed by liquidity fluctuations and policy uncertainties.

The current significant characteristic of the global economy is liquidity-driven market behavior. Traditional economic theory holds that asset prices should reflect intrinsic value or the discounted future cash flows. However, in the era of hyper-speculative capitalism, liquidity, or the degree of fund abundance, has become the core factor dominating market prices.

Taking Bitcoin as an example, its price fluctuations are highly correlated with the growth of the global M2 money supply. When central banks inject a large amount of funds into the market through quantitative easing and other means, this money often flows into high-risk, high-return assets such as cryptocurrencies. This phenomenon is particularly evident in 2025, where despite the Federal Reserve maintaining high interest rates, Bitcoin continues to rise, reflecting the market's reliance on Liquidity surpassing its concern for traditional economic indicators.