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Why should we be optimistic about the medium- and long-term trend of the crypto market?
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There are two issues that force the Fed to cut interest rates significantly in the coming months. First, the Maturity Wall of $9 trillion worth of Treasury bonds this year forces the Trump administration to do everything it can to seek interest rate cuts to save trillions of dollars in refinancing costs. However, in the Fed's view, the current inflation level does not leave room for a rapid rate cut. Therefore, the best explanation for the Trump administration's seemingly unreasonable radical policies and measures, such as tariffs and the establishment of DOGE, is that they constitute a coordinated mechanism to try to use macro uncertainties to force the Fed to cut interest rates. Otherwise, the US government will have to pay at least 3-4 times the interest after the rollover. In fact, the yield on two-year short-term Treasury bonds has been falling, reflecting the market's risk aversion and capital inflows into Treasury bonds.
The second reason for big rate cuts in the coming months is also due to the maturity wall, but this time it refers to the more than $500 billion in U.S. commercial real estate loans that mature this year. Many CRE loans were previously underwritten at lower rates during the pandemic, and face refinancing challenges in an environment of continued high interest rates, which could lead to higher default rates, especially for overleveraged properties. In particular, the increasing popularity of working from home has triggered structural changes that have led to high housing vacancy rates after the pandemic. In fact, potential large-scale defaults on CRE loans could cause the MOVE Index to soar.
Given these two pressing issues caused by the current high interest rates, the Trump administration must take radical measures to cut interest rates as soon as possible. Otherwise, these debts must be rolled over, the US government will face higher refinancing costs, and many commercial real estate loans may not be rolled over, resulting in a large amount of bad debts.
The biggest influence on the crypto market is market liquidity. But the factors that have the greatest impact on liquidity are monetary policy and the popularity of stablecoins. Driven by a moderate monetary policy, the popularity of stablecoins can further catalyze capital inflows in a bull market. The upside of a bull market depends on the increase in the total supply of stablecoins. In the last bull market, the total supply of stablecoins increased 10 times from trough to peak, while it only increased by about 100% from 2023 to early 2025.
The collateral for stablecoins in circulation is mainly short-term U.S. Treasuries. Therefore, as the U.S. government rolls over trillions of dollars in maturing Treasury bonds this year, the more popular stablecoins become, the higher the demand for short-term Treasury bonds.
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