Metrics Ventures Market Observation: A Brewing Storm
- Core Thesis: Crypto assets currently lack a clear narrative driver, with the market in a consolidation period marked by a scarcity of innovation 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 countries, and the evolving policy stance of [Warsh]. A potential breakout for Bitcoin could stem from a credit crisis triggered by the bursting of the AI bubble.
- Key Elements:
- The market is fluctuating between expectations of reflation and interest rate hikes. Tech stocks benefit from short-term liquidity concentration, but crypto assets are under strong resistance from the 200-day moving average.
- The deep-seated issues in the US balance sheet are beyond the Fed’s capacity to resolve. The [Warsh] hypothesis might only hold if AI transforms society's生产关系. Non-AI-leading nations will likely face fiscal and monetary collapse first.
- Crypto assets lack independent catalysts, with persistently low trading volumes and innovation scarcity. They function more as a hedge against global liquidity risk rather than a directly correlated asset.
- Inflation/stagflation stemming from supply chain disruptions clearly favor high-liquidity havens like gold, oil, and grain. Crypto assets currently lack this role.
- Bitcoin requires a longer period for筹码沉淀 and clearing. The consolidation phase is expected to extend at least until Q4 2026.
- Future focus should be on the evolution of [Warsh]'s stance, the underestimated severity of supply chain damage, and fiscal-monetary crises in non-AI beneficiaries like the UK and Japan.
- The bursting of the AI bubble could trigger sovereign credit crises, potentially marking the starting point for Bitcoin's final major rally.
MVC Crypto Secondary Fund May Market Observations
1/ Over the past month, the market has been caught in a whirlwind of trading expectations. On one hand, it was trading the reflation narrative stemming from damaged global supply chains; on the other, it was trading around interest rate hikes, whether based on factual conditions or the so-called "Warsh expectations." These two forces, like fire and ice, have caused persistent volatility in commodities and most equity assets. However, tech assets, which bear the brunt of both pressures, paradoxically continue to benefit from the concentration of short-term liquidity.
2/ Factually, as we analyzed in the context of the Strait of Hormuz situation, the entrenched balance sheet ailments of the US are now beyond the capacity of any single Fed chair to resolve. All of Kevin Warsh's hypothetical scenarios are only tenable if AI fundamentally transforms social production relations. Until that day arrives, the majority of the world's nations not leading the AI race (virtually all except the US and China) will be the first to face fiscal and monetary policy collapse. By then, the identity of the Fed chair will essentially become irrelevant.
3/ From a trading perspective, crypto assets don't yet fit into any of the aforementioned narratives. We also note that the 200-day moving average continues to exert strong resistance on asset price trends. Even if the "anything but AI" theme expands to "anything but mines," it will be difficult to change this situation. This chapter of silicon versus carbon leaves no stage for crypto, but one will certainly arrive in the future—rest assured.
Market Overview and Commentary on Overall Market Trends and Movements
Beyond the Hype narrative, there is little worth commenting on in the crypto market. Low trading volumes and a lack of innovation have become clichés, and the technical resistance is quite apparent. In reality, crypto assets may serve as a decent hedge against global liquidity risks. However, all current market focal points are difficult to link directly to crypto. Meanwhile, inflation/stagflation caused by supply chain damage has clearer, large-cap vessels for capital absorption, such as gold and other metals, petrochemicals, and grains. From a positioning perspective, Bitcoin also needs more time for consolidation and washout. The gestation of this variable is crucial, and we expect this period of consolidation to last until at least Q4 2026.
Looking ahead, we believe three things will sequentially dominate future market volatility:
① In the short term, the market will closely watch whether Kevin Warsh repeats the missteps of Bessent and Musk, turning his stance into the next "333" plan.
② The true severity of damage to a vast number of global supply chains and the time required for their repair are clearly being underestimated by the market. In the medium term, the market will eventually recognize that the shortage of local resources and price fluctuations are far more serious than initial expectations, much like we saw during the pandemic years.
③ Countries not benefiting from AI—led by the UK and Japan—will be the first to face inflation and fall, subsequently experiencing 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 frameworks could collapse rapidly.
One day, the market may come to understand that the bursting of the AI bubble could trigger contagious credit crises in certain sovereign states. The monetary and fiscal policy response at that time might well be the perfect catalyst for Bitcoin's final major bull run.
