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"BTC is not a threat to the US dollar, what is really threatening the US dollar is the behavior of the current Biden administration."

ESG 𝟑 Reasons Why One Thing Doesn’t Produce Results 𝟏: Is the letter deep enough? 𝟐: Not firm enough 𝟑: Not hard enough Wherever you are-- Focus on positioning and targeting down to earth is important [Come on] [Come on] [Fist] [Fist] [Victory] [Victory]​​​​

This article will start from 7 basic issues to explain the issuance logic, technical framework, regulatory rules and potential impact of the Hong Kong dollar stablecoin, and take USDC as an example to analyze the future operating mechanism of the Hong Kong dollar stablecoin.

On July 3, a number of experts and scholars concerned about Hong Kong’s Web3 published a joint signed article in Ta Kung Pao, strongly proposing that the Hong Kong SAR government issue a Hong Kong dollar stable currency backed by Hong Kong’s foreign exchange reserves to promote financial technology innovation and enhance the competitiveness of the financial market , so that Hong Kong can maintain its competitive advantage in the digital economy era. At the end of June, Okey Cloud Chain Research Institute also published a special article entitled "Seven Questions on Hong Kong Dollar Stablecoin: Issuance Logic, Regulatory Rules and Potential Impact" on Caihua News, the most well-known financial media in Greater China, and communicated with all walks of life. Share your observations and thoughts on Hong Kong dollar stablecoins.

Cycle Restructuring Under a Liquidity Shock: Can Fed Rate Cuts and QE Rewrite Bitcoin’s Four-Year Rhythm? When Bitcoin’s 50-week moving average—the long-term bull-bear dividing line on the weekly chart—was breached, when on-chain data showed long-term holders systematically reducing their positions, and when the market fear index hovered at historic lows, the verdict that “this bull market is over” seemed set in stone. Yet, at this very moment, the bell of a Federal Reserve policy shift quietly tolled—rate cuts have begun, quantitative tightening (QT) has officially ended, and the market broadly expects a restart of quantitative easing (QE) in 2026. Will this incoming wave of global liquidity become an epic variable that rewrites the structure of the bear market? Will the four-year cycle that has defined Bitcoin since its inception be completely upended, or will it be reshaped and extended under new macro forces? This article systematically explores the deep interaction between macro liquidity and Bitcoin’s cycle through historical review, mechanism analysis, and scenario deduction. I. The Contemporary Dilemma of the Four-Year Cycle: Statistical Miracle or Reflexivity Curse? Bitcoin’s four-year cycle is not mysticism, but is rooted in the predictability of its underlying monetary issuance mechanism. Every 210,000 blocks (about four years), the halving event delivers a cyclical shock to supply. When combined with herd mentality and memory effects in human behavior, a self-contained loop emerges: “halving → expectation formation → capital inflow → bubble expansion → profit-taking → bear market purge.” This pattern was flawlessly validated after the three halvings in 2012, 2016, and 2020, with a temporal error margin of no more than ±2 months—a “statistical miracle” rare in financial markets. However, the anomalous performance of the 2024–2025 cycle has posed a serious challenge to this rule for the first time. After the fourth halving in April 2024, Bitcoin touched an all-time high of $126,000 in October 2025, but the entire rally displayed an unprecedentedly “tepid” character: lacking exponential acceleration, absent an altcoin frenzy, with volatility continuously compressed. More crucially, cracks appeared in the cycle’s temporal structure—though the traditional rule of peaking 12–18 months post-halving was followed, the early positioning by institutional money and the delayed exit of retail investors fundamentally transformed the market structure. This transformation is essentially the curse of reflexivity: when enough participants believe in and act early on a cycle, the cycle itself gets “smoothed out.” ETF capital began building positions at the start of 2024, locking their average cost around $89,000; meanwhile, retail, fearful of the “institutional market,” hesitated, leading to a mismatch in timing between major players and peripheral participants. The spontaneity and chaotic consensus upon which the traditional cycle relied has been eroded by institutional rational pricing, diluting the “purity” of the cycle. II. Lessons from History: The “Lag Mystery” of Liquidity Transmission in 2019–2020 To understand the impact of future rate cuts and QE, we must look for comparable samples in history. In August 2019, the Fed announced an end to quantitative tightening (QT) and launched “insurance rate cuts,” a policy mix highly similar to today’s context. Backtesting on TradingView shows the Nasdaq began rising almost simultaneously with the policy shift, while Bitcoin endured a six-month lag, only truly entering a bull market after the Fed’s “unlimited QE” in March 2020. This “lag phenomenon” reveals an often-overlooked market rule—the theory of liquidity tier transmission. In the risk asset hierarchy, there is a clear “liquidity capture priority”: First Tier: Mainstream Tech Stocks (Nasdaq). As the core allocation for institutional funds, Nasdaq enjoys the highest liquidity sensitivity. When monetary policy eases, assets with mature valuation models, deep liquidity, and stable performance benefit first. From August 2019 to February 2020, the Nasdaq 100 rose nearly 40%, while Bitcoin fell about 15% in the same period. Second Tier: Bitcoin. Once Nasdaq valuations are pushed to their upper limits, capital seeks “risk-adjusted yield enhancement.” At this point, Bitcoin’s “digital gold” narrative garners institutional attention. Its high volatility and low correlation characteristics become tools for risk diversification, not the primary target. Third Tier: Ethereum and Altcoins. Only when a Bitcoin bull run is established and the wealth effect spills over do retail and high-risk capital flow into higher-beta crypto assets. The “alt season” of 2021 is the ultimate illustration of this logic. The underlying logic of this transmission chain is risk budget constraint. Institutional fund managers face strict volatility and drawdown limits, making it impossible for them to heavily allocate to Bitcoin (with 75% annualized volatility) at the onset of liquidity release. Instead, only after core holdings (US stocks) provide a sufficient cushion do they deploy “risk budget” into crypto. The six-month lag in 2019–2020 is precisely the result of this institutional due diligence process. Notably, while the pandemic crash disrupted the time series, it actually accelerated liquidity transmission. The March 23 “unlimited QE” declaration eliminated all policy uncertainty, and institutions no longer needed to “wait for more evidence,” moving capital from bonds → stocks → crypto in a very short time. Without the pandemic shock, normal transmission might have taken 8–10 months. This suggests that black swan events, while damaging short-term prices, may compress policy transmission lags. III. The Current Macro “Similarity Trap”: A Heterogeneous Comparison of 2025 vs. 2019 Superficially, today’s market and 2019 share similarities: a rate cut cycle has begun, QT has ended, and QE expectations are rising. But at a deeper structural level, at least three key variables have fundamentally changed: 1. Institutionalization: From Margins to Mainstream In 2019, the crypto market was still dominated by retail and geeks, with institutional participation below 5%. By 2025, US Bitcoin ETF holdings alone reach $176 billion, with institutions accounting for over 35% of the market. This means the “friction coefficient” of liquidity transmission has dropped significantly, and institutions respond to policy signals much faster than retail. However, this also introduces new fragility—when the macro turns negative, institutional withdrawal is far more synchronized and forceful than retail. 2. Valuation Anchoring: From Narrative-Driven to Cash Flow Discounting In 2019, Bitcoin’s price relied purely on the “digital gold” narrative and halving expectations, lacking a fundamental anchor. By 2025, with spot ETFs, staked yield, and mature options markets, Bitcoin pricing now incorporates a “digital asset cash flow discount” framework. This heightens sensitivity to real interest rates (TIPS yields). While Fed rate cuts increase Bitcoin’s “real yield advantage,” US stocks also see improved dividend yields and buybacks, making the liquidity competition more complex. 3. Regulatory Clarity: From Gray Area to Licensing System In 2019, global regulation was murky and markets were “wildly growing.” By 2025, Hong Kong, the EU, and Dubai have relatively clear licensing frameworks, and while the US Clarity Act remains stalled, the direction is clear. Regulatory certainty reduces compliance risk premiums for institutions but also limits the space for “irrational exuberance.” Institutions cannot “blindly buy” as in 2020—they must meet stricter ESG, custody, and risk control requirements. Thus, simple analogies to 2019 are “carving a boat to find a sword.” While rate cuts and QE are still positive, their marginal benefit to Bitcoin may be offset by institutional capital reallocation. When the Nasdaq rallies on liquidity, institutions face “rebalancing pressure” and may withdraw from Bitcoin ETFs to increase US equity exposure, creating short-term liquidity drain. IV. Scenario Deduction: Three-Dimensional Reshaping of the Bear Market (Time, Depth, Structure) Based on the above, we can construct a three-dimensional impact model to quantify how rate cuts and QE may affect this bear market: Time Dimension: Earlier Bear Market Bottom Confirmation If the Fed starts QE in Q4 2025 or Q1 2026, the liquidity transmission lag will be about 4–6 months (shorter than 2019 due to higher institutionalization). This means the bear market bottom could come as early as June–August 2026, rather than the traditional October–December window. However, this “advance” is not an absolute positive—it may mean the bear market shifts from a “sharp V-bottom” to a “flat U-bottom,” with a longer period of bottoming and churning, exchanging time for space and facilitating position rotation. Depth Dimension: Passive Constraint on Downside In 2019–2020, Bitcoin’s maximum drawdown reached 70% (pandemic crash low). Excluding black swan events, a reasonable current drawdown would be 50%–60%, corresponding to a price range of $50,000–$62,000. But rate cuts and QE create a “liquidity floor”—when the price nears the institutional cost line ($89,000), ETF inflows naturally start, providing support. Thus, the bear market’s downside will be “blunted” by policy easing, and the probability of a deep bear market (below $50,000) is greatly reduced. More precise measurement should incorporate indicators like the MVRV-Z score and Puell Multiple. Currently, MVRV has fallen from its highs but remains well above typical bear bottom levels (<1.0), suggesting another 3–6 months of valuation compression is needed. Rate cuts and QE may shorten this cycle but cannot fully eliminate it. Structural Dimension: From “Broad Bear Market” to “Structural Bear Market” Traditional bear markets are broadly declining, but this cycle may see differentiated adjustment: • Bitcoin: With ETF support and institutional allocation demand, the drawdown is smallest, likely finding strong support at $60,000–$70,000. • Ethereum: Impacted by Layer2 competition and rising staking rates, performance may be between Bitcoin and altcoins. • Altcoins: Overvalued projects lacking fundamentals may see 70%–90% declines, completing a full purge. This structural divergence means index investing strategies will fail, and careful selection of projects with real revenue, user growth, and technological moats is required. V. The Evolution of Cycle Theory: From Mechanical Determinism to Complex Adaptive Systems The four-year Bitcoin cycle isn’t dead, but its mechanism has shifted from mechanical determinism to a complex adaptive system. Halving remains a predictable supply-side shock, but its price effect is now modulated by: 1. Institutional Behavior Functions: Institutional capital changes the game theory foundation. Traditional cycles rely on “uniform retail behavior,” but institutions have heterogeneous strategies, with some acting counter-cyclically—positioning before the halving, profit-taking after—creating self-fulfilling negative feedback. 2. Macro Policy Exogenous Variables: Fed policy is no longer background noise but a core driver. Bitcoin’s “stock-to-flow” model must now incorporate a “liquidity-to-risk” component, forming a more complex pricing equation. This explains the “tepid” 2025 cycle—rate hikes and QT offset the halving boom. 3. Narrative Decay Effect: The marginal influence of the “halving bull market” narrative is diminishing. Each cycle, this story is reinforced but its information value fades. New grand narratives (“global reserve asset,” “AI era value storage”) are needed to ignite the next frenzy. Thus, future cycle analysis must use a multi-factor model: cycle regularity (weight 30%) + liquidity (weight 40%) + institutional behavior (weight 20%) + narrative strength (weight 10%). Any single-factor forecast will be biased. VI. Investment Strategy: Finding Alpha Between Cycles and Policy Faced with a tug-of-war between cycles and macro, investors must upgrade their strategy frameworks: Short Term (3–6 months): Stay defensive, with spot positions no more than 50%, and keep cash awaiting two confirmation signals: • Signal One: Bitcoin price falls below $70,000, entering the institutional “strategic accumulation zone.” • Signal Two: The Fed announces a clear QE timeline, and the Nasdaq rises more than 15%. Mid Term (6–12 months): Build core positions in the $60,000–$70,000 range, focusing on Bitcoin and top RWA projects. Use options strategies (such as selling out-of-the-money puts) to enhance returns while keeping upside exposure. Long Term (12–24 months): Position for the 2028 halving cycle, focusing on projects with deflationary tokenomics and real revenue models. The cycle effect won’t disappear, but its “compound effect” will be more concentrated in quality assets rather than the whole market beta. Macro Monitoring Checklist: • Fed dot plot and weekly balance sheet data (WALCL indicator) • Net inflow/outflow rate of Bitcoin ETF funds • 30-day correlation coefficient between Nasdaq and Bitcoin • Total stablecoin market cap changes (USDT+USDC) VII. Conclusion: The Cycle Is Not Dead, But Participants Must Evolve Bitcoin’s four-year cycle hasn’t been ended by the Fed’s liquidity policy, but rather embedded into a broader macro narrative. Rate cuts and QE won’t immediately reverse the bear market, but will significantly alter its timing, depth, and structure. History teaches us that liquidity transmission has irreducible lags, institutional behavior takes precedence over retail sentiment, and regulatory evolution reshapes the market’s risk-reward curve. For investors, this means a mandatory cognitive upgrade: abandon reliance on mechanical cycle charts, and move toward dynamic multi-factor insights; discard “easy money = moon” thinking, and understand liquidity’s hierarchical transmission in risk assets; go beyond the “hold-and-wait” primitive strategy, and build a multidimensional investment system including timing, asset selection, and strategy selection. As complex systems theory reveals, the Bitcoin market is evolving from a “cyclical clock” to an “adaptive organism.” Its rhythm still exists, but is no longer mechanically precise; its trend remains upward, but the path is more tortuous. In this evolutionary game, only those who understand the rules and adapt to change will survive the cycle and capture long-term value with certainty. What do you think this bear market will look like? Or will you stick to the view that the bull market is still on? Welcome to share your perspective in the comments. Looking forward to discussing with you. I’m the Crypto Prospector—if you found this article helpful, please like and follow. Share the article with your friends. A rose given, a fragrance remains in your hand. Your support is my greatest motivation to keep updating. Risk Disclaimer: This analysis is based on historical data and public information and does not constitute investment advice. The cryptocurrency market is highly volatile. Please manage your position risk strictly and avoid excessive leverage. #参与创作者认证计划月领$10,000 $BTC ‌