In addition to closely monitoring the U.S. monetary policy, it's equally important to pay attention to domestic financial data changes.

After a week of fluctuating tariff tensions, the market finally had a chance to catch its breath over the weekend, but how long this respite will last is uncertain. Tariff issues are event-driven and sudden, leading to capital avoidance and temporary emotional collapses, hence the volatility is also very high.

However, once the market confirms the fundamental changes brought by tariffs and the release of risk aversion sentiment, the entire financial market will find a new balance. This is why global stock markets, especially the U.S. stocks, ended the week's volatility with gains last Friday, which can be seen from the changes in the S&P 500's volatility index.

BTC Future Trends: Beyond the Fed, Another Important Data

It can be observed that last week, the VIX index reached a recent high, with only the extreme event of the Bank of Japan's interest rate hike last year and the financial turmoil caused by the 2020 pandemic in the past few years being comparable. This is also why the market experienced such significant fluctuations in the past week, as this is historically rare.

So, after this huge volatility subsides, the factors affecting the Crypto market trend will return to the old familiar topics of "inflation" and "interest rate cuts," because only interest rate cuts can bring about a "flood of liquidity," and hope for growth in risk assets led by BTC.

By comparing the global broad money supply (M2) with BTC's trend over the past 10 years, we can analyze this correlation. The chart below shows that the significant increase in BTC over the past 10 years is based on the global surge in M2, and this correlation is far beyond other financial data.

BTC Future Trends: Beyond the Fed, Another Important Data

This is also why whenever the Fed announces data related to inflation or interest rate cuts, BTC will always fluctuate because it ultimately affects whether new funds will enter the Crypto domain.

But currently, most people in the Crypto market seem to focus only on the Fed's path of interest rate cuts, neglecting another data worth paying attention to—the PBOC asset size, that is, the central bank's asset size, which reflects the current liquidity of our country's currency.

While everyone is focused on the financial markets of the West Coast, they overlook our own liquidity, which is also closely related to the rise and fall of BTC, after all, we are a major economic power.

The chart below shows the change in BTC's past three cycles and the growth of PBOC asset size, which can be seen to have a correlation that runs through every significant increase in BTC, also coinciding with the cycle every four years.

BTC Future Trends: Beyond the Fed, Another Important Data

The liquidity of PBOC played a role in the Crypto bull market from 2020-2021, the bear market in 2022, the recovery from the cycle low point from 2022 to early 2023, the surge in the fourth quarter of 2023 (before BTC ETF approval), and the correction from the second to the third quarter of 2024.

Similarly, a few months before the U.S. election in 2024, PBOC liquidity turned positive again, just bringing a wave of "election bull market."

However, in the chart below we can see that the size of POBC began to decline after September 2024 and bottomed out at the end of 2024, currently rising to the highest point in the past year. And from the perspective of data correlation, changes in PBOC liquidity usually precede significant fluctuations in BTC and Crypto markets.

BTC Future Trends: Beyond the Fed, Another Important Data

Interestingly, in the 2017 BTC bull market, the Fed was not the side that "flooded liquidity" but instead raised interest rates three times throughout the year and implemented quantitative tightening, but risk assets led by BTC still performed very optimistically in 2017 because the PBOC size reached a new high that year.

BTC Future Trends: Beyond the Fed, Another Important Data

Even in terms of the S&P 500's increase, there is also a certain correlation with PBOC liquidity. Historical data shows that the annual correlation coefficient between PBOC total asset size and the S&P 500 is about 0.32 (based on data from 2015 to 2024).

Of course, to some extent, it is also because the PBOC's quarterly monetary policy report and the Fed's interest rate meeting have overlapping periods, so the correlation is amplified in the short term.

In summary, we can find that in addition to closely monitoring the U.S. monetary policy, it is equally necessary to pay attention to domestic financial data changes. And the news a week ago has already been released: "Monetary policy tools such as reserve requirement cuts and interest rate cuts have ample room for adjustment and can be introduced at any time," what we need to do is to track this change.

It is worth noting that, in terms of asset size, by January 2025, China's total deposits were $4.23 trillion, while the U.S. total deposits were about $17.93 trillion, it must be said that in terms of deposit size, we have more financial possibilities, and if liquidity improves, perhaps some kind of change will come.

Of course, another point that needs to be discussed is whether the liquidity of funds, if available, can flow into the Crypto market, after all, there are still some restrictions, but Hong Kong has already given the answer, from the policy relaxation and convenience, it is different from a few years ago.

Finally, to end this week's review, let's use Ray Dalio's words: "When the wind blows, pigs can fly too,". It's better to go with the flow than to go against the current. What we need to do besides waiting is to dare to take advantage of the wind when it rises and fly with the wind

In addition to closely monitoring the U.S. monetary policy, it's equally important to pay attention to domestic financial data changes.

After a week of fluctuating tariff tensions, the market finally had a chance to catch its breath over the weekend, but how long this respite will last is uncertain. Tariff issues are event-driven and sudden, leading to capital avoidance and temporary emotional collapses, hence the volatility is also very high.

However, once the market confirms the fundamental changes brought by tariffs and the release of risk aversion sentiment, the entire financial market will find a new balance. This is why global stock markets, especially the U.S. stocks, ended the week's volatility with gains last Friday, which can be seen from the changes in the S&P 500's volatility index.

BTC Future Trends: Beyond the Fed, Another Important Data

It can be observed that last week, the VIX index reached a recent high, with only the extreme event of the Bank of Japan's interest rate hike last year and the financial turmoil caused by the 2020 pandemic in the past few years being comparable. This is also why the market experienced such significant fluctuations in the past week, as this is historically rare.

So, after this huge volatility subsides, the factors affecting the Crypto market trend will return to the old familiar topics of "inflation" and "interest rate cuts," because only interest rate cuts can bring about a "flood of liquidity," and hope for growth in risk assets led by BTC.

By comparing the global broad money supply (M2) with BTC's trend over the past 10 years, we can analyze this correlation. The chart below shows that the significant increase in BTC over the past 10 years is based on the global surge in M2, and this correlation is far beyond other financial data.

BTC Future Trends: Beyond the Fed, Another Important Data

This is also why whenever the Fed announces data related to inflation or interest rate cuts, BTC will always fluctuate because it ultimately affects whether new funds will enter the Crypto domain.

But currently, most people in the Crypto market seem to focus only on the Fed's path of interest rate cuts, neglecting another data worth paying attention to—the PBOC asset size, that is, the central bank's asset size, which reflects the current liquidity of our country's currency.

While everyone is focused on the financial markets of the West Coast, they overlook our own liquidity, which is also closely related to the rise and fall of BTC, after all, we are a major economic power.

The chart below shows the change in BTC's past three cycles and the growth of PBOC asset size, which can be seen to have a correlation that runs through every significant increase in BTC, also coinciding with the cycle every four years.

BTC Future Trends: Beyond the Fed, Another Important Data

The liquidity of PBOC played a role in the Crypto bull market from 2020-2021, the bear market in 2022, the recovery from the cycle low point from 2022 to early 2023, the surge in the fourth quarter of 2023 (before BTC ETF approval), and the correction from the second to the third quarter of 2024.

Similarly, a few months before the U.S. election in 2024, PBOC liquidity turned positive again, just bringing a wave of "election bull market."

However, in the chart below we can see that the size of POBC began to decline after September 2024 and bottomed out at the end of 2024, currently rising to the highest point in the past year. And from the perspective of data correlation, changes in PBOC liquidity usually precede significant fluctuations in BTC and Crypto markets.

BTC Future Trends: Beyond the Fed, Another Important Data

Interestingly, in the 2017 BTC bull market, the Fed was not the side that "flooded liquidity" but instead raised interest rates three times throughout the year and implemented quantitative tightening, but risk assets led by BTC still performed very optimistically in 2017 because the PBOC size reached a new high that year.

BTC Future Trends: Beyond the Fed, Another Important Data

Even in terms of the S&P 500's increase, there is also a certain correlation with PBOC liquidity. Historical data shows that the annual correlation coefficient between PBOC total asset size and the S&P 500 is about 0.32 (based on data from 2015 to 2024).

Of course, to some extent, it is also because the PBOC's quarterly monetary policy report and the Fed's interest rate meeting have overlapping periods, so the correlation is amplified in the short term.

In summary, we can find that in addition to closely monitoring the U.S. monetary policy, it is equally necessary to pay attention to domestic financial data changes. And the news a week ago has already been released: "Monetary policy tools such as reserve requirement cuts and interest rate cuts have ample room for adjustment and can be introduced at any time," what we need to do is to track this change.

It is worth noting that, in terms of asset size, by January 2025, China's total deposits were $4.23 trillion, while the U.S. total deposits were about $17.93 trillion, it must be said that in terms of deposit size, we have more financial possibilities, and if liquidity improves, perhaps some kind of change will come.

Of course, another point that needs to be discussed is whether the liquidity of funds, if available, can flow into the Crypto market, after all, there are still some restrictions, but Hong Kong has already given the answer, from the policy relaxation and convenience, it is different from a few years ago.

Finally, to end this week's review, let's use Ray Dalio's words: "When the wind blows, pigs can fly too,". It's better to go with the flow than to go against the current. What we need to do besides waiting is to dare to take advantage of the wind when it rises and fly with the wind