If Trump comes to power, the Federal Reserve may have to adopt a different approach.
He recently publicly stated that former Federal Reserve Governor Kevin Warsh is his top choice for the next chair. Prediction markets indicate that the probability of this person being elected is rising rapidly.
If he really comes to power, the logic in the cryptocurrency space may need to be reassessed.
He has two core viewpoints that are quite different from the current Powell:
Support for "cutting interest rates while shrinking the balance sheet." It sounds contradictory, but this means he wants to stimulate the economy through interest rate cuts while simultaneously reducing the Federal Reserve's massive balance sheet. If implemented, the "tap" of market liquidity will not be as wide open as it used to be. $XRP
Blaming inflation on the Federal Reserve itself. He believes the root cause of price issues is that the central bank printed too much money in the past. Therefore, he will have a "zero tolerance" attitude towards inflation, and once data rebounds, the policy shift may happen faster than anyone imagines.
What does this mean for us?
In the short term: His support for interest rate cuts may be interpreted by the market as a positive signal or stimulate a wave of emotional rebound. $BTC
In the long term: We must remain vigilant. He is a typical "hawk" committed to reducing the balance sheet and is extremely tough on inflation. This means that the extent of easing may be limited, while the speed of tightening will be very fast.
In this potential change, my advice is:
1. Don't get blindly excited just because you hear "interest rate cuts." Pay attention to the real increase in liquidity, not just the slogans.
2. Stay cautious and use high leverage sparingly. During the period of fluctuating policy expectations, market volatility will be amplified, and high leverage can easily lead to being washed out.
3. Focus on spot positions and reduce contract speculation. In a phase of unclear direction, holding spot is the safest way to stay at the table.
In summary, a new figure may bring a new set of rules. Before the tide changes direction, understanding the flow of water is more important than blindly swimming.
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