Metrics Ventures Market Observation: Brewing Storms
- Core Thesis: Crypto assets currently lack a clear narrative driver, with the market in a consolidation period marked by innovation scarcity and low trading volumes, expected to last until Q4 2026. Future market volatility will be dominated by supply chain inflation, fiscal crises in non-AI nations, and the evolution of the Walsh policy stance. Bitcoin’s breakout may originate from a credit crisis triggered by the bursting of the AI bubble.
- Key Elements:
- The market oscillates between pricing in re-inflation and expectations of interest rate hikes. Tech stocks benefit from short-term liquidity concentration, but crypto assets face strong resistance at the 200-day moving average.
- The structural issues on the US balance sheet are beyond the Fed’s ability to resolve. The 'Walsh hypothesis' only holds if AI fundamentally alters society's production relations; non-AI-leading nations will experience fiscal and monetary disintegration first.
- Crypto assets lack independent catalysts, with persistent low volumes and innovation scarcity. They function more as a global liquidity risk hedge than a directly correlated asset.
- Inflation/stagflation resulting from supply chain damage clearly points towards gold, oil, and grain as suitable vehicles for large capital inflows. Crypto assets currently do not play this role.
- Bitcoin requires a longer period for chip consolidation and washout. The consolidation phase is expected to extend to at least Q4 2026.
- Future focus should be on the evolution of the Walsh stance, the underestimated severity of supply chain damage, and the fiscal and monetary crises in non-AI beneficiary countries like the UK and Japan.
- The bursting of the AI bubble could trigger a sovereign credit crisis, at which point Bitcoin may find the launching pad for its final major bull run.
Crypto Secondary Market Fund MVC May Market Observations
1/ Over the past month, the market has been oscillating between trading expectations—on one hand pricing in reflation from damaged global supply chains, and on the other pricing in rate hikes, whether factual or based on the Warsh hypothesis. These two forces, like fire and ice, have caused continuous fluctuations in commodities and most equity assets. Yet, in reality, the tech sector, while impacted by both forces simultaneously, continues to benefit from the concentration of short-term liquidity.
2/ From a factual standpoint, as we analyzed regarding the situation in the Strait of Hormuz, the deep-seated balance sheet ailments of the United States have already surpassed the scope of what a single Fed chair can address. All assumptions associated with Warsh can only hold true when AI fundamentally transforms social production relations. Until that day arrives, the majority of the world's nations that are not AI leaders (virtually all except the US and China) will be the first to experience fiscal and monetary policy collapse. By that point, who occupies the Fed chair might no longer be a relevant question.
3/ From a trading perspective, crypto assets currently see no clear catalyst in any of the aforementioned narratives. We also observe that the 200-day moving average continues to exert strong resistance on asset price trajectories. Even if the "anything but AI" trade broadens to "anything but mines," it will struggle to change this dynamic. In this current phase of silicon versus carbon, there is no stage for crypto, but rest assured, one will certainly emerge in the future.
Overall Market Review and Commentary on Market Trends
Beyond Hype, there is little worth commenting on in the crypto market. The lack of volume and innovation is a tired refrain, and the technical resistance remains quite evident. In fact, crypto assets might be a good tool for hedging global liquidity risks. Currently, all market attention is difficult to directly link to crypto, while inflation/stagflation caused by supply chain damage clearly has more established large-cap instruments for capital absorption, such as gold and other metals, petrochemicals, and grains. From a positioning perspective, Bitcoin also needs more time for consolidation and clearing. The gestation of this variable is critically important, and we expect this period of consolidation to last at least until Q4 2026.
Looking ahead, we believe three things will increasingly dominate future market volatility:
① In the short term, the market will closely watch whether Warsh repeats the mistakes of Bessent and Musk, turning his own stance into the next "333" plan;
② The actual severity of widespread supply chain damage and the time required for future repair are clearly underestimated by the market. In the medium term, the market will eventually realize that the scarcity of local resources and price volatility far exceed initial expectations, much like during the pandemic years;
③ Countries like the UK and Japan, which do not benefit from AI and are the first to face inflation-driven collapse, will successively experience severe fiscal and monetary policy crises. We should pray that AI substitution does not happen too quickly; otherwise, the existing credit system and national welfare fiscal systems will collapse rapidly.
One day, the market may realize that the bursting of the AI bubble could trigger contagious credit crises in certain sovereign nations. The monetary and fiscal response at that time might just be the perfect igniter for Bitcoin's final major bull run.
