Original article by @BlazingKevin_ , the Researcher at Movemaker
The starting point of Bitcoins structural slow bull market has been formed
I think we are at the starting point of a long-term or even decade-long slow bull cycle for Bitcoin. From a phenomenal point of view, the key turning point that prompted this trend was the approval of the Bitcoin ETF at the end of 2023. From that moment on, the market attributes of Bitcoin began to change qualitatively, transforming from a completely risky asset to a safe-haven asset step by step. Now is the early stage of Bitcoin becoming a safe-haven asset, but at the same time, the United States has entered a period of interest rate cuts, so Bitcoin is in a good growth space. The role of Bitcoin in asset allocation has shifted from speculative object to asset allocation tool, stimulating longer-term demand increments.
The evolution of this asset attribute happens to occur at a turning point when monetary policy is about to change from tight to loose. The Fed’s interest rate cut cycle is not an abstract macro background, but a capital price signal that has a substantial impact on Bitcoin.
Under this mechanism, Bitcoin will present a new operating characteristic: whenever the market shows signs of correction after overheating sentiment, when the price is about to enter the edge of a bear market, there will be a wave of liquidity entering the market, interrupting the downward trend. We often say that there is sufficient liquidity but unwilling to bet in the market, which is not entirely true. Other copycat crypto assets cannot find PMF due to the evaporation of valuation water and the lack of technology landing, and temporarily lack medium-term configuration logic; Bitcoin becomes the only deterministic asset that can be bet at this time. Therefore, as long as the expectation of easing still exists and ETFs continue to absorb funds, it will be extremely difficult for Bitcoin to form a traditional bear market during the entire interest rate cut cycle. At most, it will experience a phased correction, or a partial bubble clearing due to sudden macro events (such as tariff shocks and geopolitical risk aversion).
This means that Bitcoin will cross the entire rate cut cycle as a quasi-safe-haven asset, and its price anchoring logic will also change accordingly - gradually transitioning from risk preference driven to macro-certainty supported. Once this rate cut cycle ends, as time goes by, ETFs mature, and institutional allocation weights increase, Bitcoin will also complete the initial transformation from a risky asset to a safe-haven asset. Next, when the next rate hike cycle begins, Bitcoin is likely to be trusted by the market as a safe haven under rate hikes for the first time. This will not only enhance its allocation status in the traditional market, but is also likely to enable it to gain some capital siphoning effect in the competition with traditional safe-haven assets such as gold and bonds, thereby opening a structural slow bull cycle spanning ten years.
It is too far to look ahead to the development of Bitcoin in many years or even 10 years. It is better to look at the current triggers that may cause Bitcoin to fall sharply before the United States truly turns to consistent easing. From the first half of this year, tariffs are undoubtedly the most disturbing event in market sentiment, but in fact, if we regard tariffs as a benign adjustment tool for Bitcoin, we may be able to examine its possible future impact from a different perspective. Secondly, the passage of the GENIUS Act marks the result that the United States accepts the inevitable decline in the status of the US dollar, and actively embraces the development of Crypto finance, amplifying the multiplier effect of the US dollar on the chain.
View tariffs as a benign adjustment tool for Bitcoin, not a black swan trigger
In the tariff process over the past few months, we can see that Trumps primary policy direction is to return manufacturing and improve finances, and in the process, to strike major rival countries. Under the goal of improving the governments fiscal situation, Trump can sacrifice price stability or economic growth. Therefore, the fiscal situation of the US government has accelerated during the epidemic. The surge in 10-year Treasury bond interest rates in the past few years has caused the US governments interest expenses to more than double in three years. The revenue from tariffs accounts for less than 2% of the federal tax structure. Even if tariffs are raised, the revenue brought in is insignificant compared to the huge interest expenses. So why does Trump keep making a fuss about tariffs?
The purpose of tariffs is to determine the attitude of allies and exchange security protection
According to the role of tariffs systematically expounded by Milan, Chairman of the White House Council of Economic Advisers, in his article Users Guide to Restructuring the Global Trade System, it can be understood that tariffs are an abnormal tool for intervening in the market and are used specially in crises or confrontations. The strategic logic of the US tariff policy is getting closer and closer to the route of fiscal weaponization, that is, by imposing tariffs, it is not only self-generating in finance, but more importantly, external rent collection on a global scale. Milan pointed out that in the context of the new Cold War, the United States no longer pursues global free trade, but is trying to reconstruct the global trade system into a friendly shore trade network with the United States as the core, that is, forcing key industrial chains to move to allied countries or the United States, and maintaining the exclusivity and loyalty of this network through tariffs, subsidies, technology transfer restrictions and other means. In this framework, high tariffs do not mean that the United States will withdraw from globalization. On the contrary, it is a hegemonic tool that attempts to regain control of the direction and rules of globalization. Trumps proposal to impose high tariffs on all Chinese imports is not essentially a comprehensive decoupling, but forcing global manufacturers to stand in line and shift production capacity from China to Vietnam, Mexico, India, and even the United States. Once the global manufacturing system is forced to reorganize around the United States, the United States can achieve continuous fiscal extraction of foreign production capacity through geo-tariff rents in the medium and long term. Just as the dollar settlement system enables the United States to tax the global financial system, the tariff system is also becoming a new fiscal weapon to bind and exploit the manufacturing capabilities of peripheral countries.
The side effects of tariffs make Trump cautious
Tariffs are a double-edged sword. While restricting imports to promote the return of manufacturing, increase government tax revenue, and limit the benefits of rival countries, they also come with side effects that may erupt at any time. The first is the problem of imported inflation. High tariffs may push up the prices of imported goods in the short term and stimulate inflationary pressure, which poses a challenge to the monetary policy independence of the Federal Reserve. The second is the fierce counterattack of rival countries, and the possibility that allied countries will protest or even retaliate against the unilateral tariff policy of the United States.
When tariffs threaten the capital market and the interest costs of the US government, Trump will be very nervous and immediately release good news about tariffs to save market sentiment. Therefore, the destructive power of Trumps tariff policy is limited, but whenever sudden news about tariffs comes out, the stock market and Bitcoin prices will fall back. Therefore, it is appropriate to regard tariffs as a benign adjustment tool for Bitcoin. Under the premise of declining expectations of a US recession, the possibility of tariffs alone creating a black swan is very low, because Trump will not let the negative impact of the event increase interest costs.
The inevitable decline of the dollars status has led to more missions for dollar stablecoins
For Trump, in order to achieve the goal of manufacturing repatriation, it is acceptable to appropriately sacrifice the status of the US dollar in international currency reserves. Because part of the reason for the hollowing out of the US manufacturing industry is the strength of the US dollar. When the US dollar continues to be strong, the worlds demand for the US dollar continues to rise, which also leads to a continuous financial surplus, and ultimately partly leads to a continuous trade deficit, causing the US manufacturing industry to flee. Therefore, in order to ensure the return of manufacturing, Trump will frequently use the weapon of tariffs, but in the process will accelerate the decline of the status of the US dollar.
It can be said that in the context of the rapid evolution of the global financial landscape, the relative weakening of the traditional dollars control has become a fact that cannot be ignored. This change is not due to a single event or policy error, but the result of the long-term superposition and evolution of multiple structural factors. Although from the surface, the dollars dominant position in international finance and trade remains solid, if we look deeper from the perspectives of the underlying financial infrastructure, capital expansion path, and the effectiveness of monetary policy tools, we will find that its global influence is facing systemic challenges.
First of all, we must face up to the fact that the multipolarization trend of the global economy is reshaping the relative necessity of the US dollar. In the previous globalization paradigm, the United States, as the export center of technology, institutions and capital, naturally has the right to speak, thus promoting the US dollar to become the default anchor currency for global trade and financial activities. However, with the rapid development of other economies, especially the growth of financial self-organization systems in Asia and the Middle East, this single settlement mechanism with the US dollar as the core is gradually facing competition from alternative options. The traditional US dollars global liquidity advantage and settlement monopoly position are beginning to be eroded. The decline in the US dollars control does not mean the collapse of its status, but its uniqueness and necessity are weakening.
The second important dimension comes from the credit overdraft trend shown by the United States in recent fiscal and monetary operations. Although past credit expansion and excessive issuance of US dollars are not new, their side effects are significantly amplified in the digital age when global markets are more synchronized. Especially when the traditional financial order has not yet fully adapted to the new growth model dominated by the digital economy and AI, the inertia of the US financial governance tools is fully revealed.
The US dollar is no longer the only asset carrier that can provide global settlement and value storage, and its role is being gradually diluted by diversified protocol assets. The rapid evolution of the Krypton system is also forcing the sovereign currency system to make strategic compromises. This swing between passive response and active adaptation further exposes the limitations of the traditional US dollar governance system. The passage of the GENIUS Act can be seen as a strategic response and institutional concession of the US federal system to the financial logic of this new era.
In summary, the relative decline of the traditional dollars control is not a dramatic collapse, but more like a gradual dissolution of institutional and structural factors. This dissolution comes from the multipolarization of global financial power, the lag of the United States own financial governance model, and the ability of the Crypto system to reconstruct new financial instruments, settlement paths, and monetary consensus. In such a transition period, the credit logic and governance mechanism that the traditional dollar relies on need to be deeply reshaped, and the GENIUS Act is the prelude to this attempt at reshaping. The signal it sends is not a simple tightening or expansion of regulation, but a fundamental shift in the paradigm of monetary governance thinking.
The GENIUS Act is a strategic compromise of “retreat to advance”
The GENIUS Act is not a regulatory move in the conventional sense, but more like a strategic compromise of retreating to advance. The essence of this compromise is that the United States has a clear understanding of the dramatic changes in the monetary governance paradigm caused by Crypto, and has begun to try to achieve a kind of leverage of future financial infrastructure through institutional design. The widespread distribution of US dollar assets in the Crypto system makes it impossible for the United States to block its development through a piece of regulation. Instead, it needs to ensure that US dollar assets will not be marginalized in the next stage of on-chain currency competition through institutional inclusive regulation.
The reason why the GENIUS Act is of strategic significance is that it no longer takes suppression as its main purpose, but instead brings the development of the US dollar stablecoin back into the federal vision by building an expected compliance framework. If we do not actively send out signals of accepting the logic of Crypto finance, we may be forced to accept a non-US dollar-dominated on-chain financial system. Once the US dollar loses its status as an anchor asset in the on-chain world, its global clearing capacity and financial instrument output capacity will also decline. Therefore, this is not out of open goodwill, but out of the need to defend monetary sovereignty.
The GENIUS Act cannot be simply classified as acceptance or inclusion of Crypto. It is more like a tactical retreat of sovereign currency under a new paradigm, with the aim of reintegrating resources and re-anchoring the on-chain monetary power structure.
Crypto brings not only a new market or a new asset class, but also a fundamental challenge to the logic of financial control and the way of value empowerment. In this process, the United States did not choose a head-on collision or mandatory regulation, but made a trade-off through the GENIUS Act - sacrificing direct control over the marginal part of crypto assets in exchange for the legitimacy of stablecoin US dollar assets; giving up part of the right to construct the on-chain order in exchange for the continuation of the anchoring right of core assets.
The role of shadow currency is amplified through Crypto tools
The introduction of the GENIUS Act is ostensibly an adjustment to the stablecoin issuance order, but its deeper significance lies in the fact that the US dollar currency structure is exploring a new expansion mechanism, extending the original shadow currency logic with the help of the on-chain system. The practice of the Restaking model in the DeFi ecosystem provides direct inspiration for this structural change. Restaking is not a simple reuse of assets, but a way to maximize the efficiency of the use of underlying collateral through protocol layer logic. It realizes the credit derivation and reuse of on-chain assets without changing the original credit source. Similar ideas are being borrowed by the fiat currency world to build a second-layer amplification mechanism for the on-chain dollar.
The shadow banking mechanism in the traditional financial system achieves the money multiplier effect through off-balance sheet credit expansion and non-traditional intermediaries. The on-chain stablecoin system has stronger modularity and automation features, making the path to the formation of the money multiplier not only shorter but also more transparent. If the collateral of the stablecoin is US debt, its essence is to use national credit as the primary anchor source, and then amplify it through multiple rounds of on-chain protocol structure. Each round of amplification can be designed as partial collateral, circular pledge or multi-asset cross-support, with sufficient on-chain liquidity and scenario requirements, a complete set of new dollar credit expansion system driven by on-chain logic can be formed.
This structure not only continues the layered characteristics of traditional shadow currencies, but also introduces a more operational on-chain clearing and tracking mechanism. Especially after the multi-chain deployment and cross-chain clearing and settlement framework gradually mature, the flow path of on-chain stablecoins will no longer be limited to centralized exchanges or payment platforms, but may go deeper into more protocol layer stacks. In such a structure, every re-pledge or asset packaging may become a new credit layer node. The GENIUS Act does not explicitly prohibit such operations, which means that the supervision itself defaults to the sustainability of the on-chain shadow currency structure, and only screens and reviews it at the first-layer issuance.
More importantly, the money multiplier effect in the on-chain environment is naturally composable. Once the on-chain stablecoin has a broad agreement circulation basis, its pledge capacity will no longer be limited by the asset-liability structure of traditional finance, but will achieve a more fine-grained asset circulation path through smart contracts. This also means that the credit boundary of the on-chain dollar will be determined by market behavior and protocol design, rather than entirely by regulatory approval. This change is a fundamental shock to the fiat currency system. It does not depend on whether the scale of a certain type of stablecoin is controllable, but on whether the credit of the US dollar can still manage its final destination in a closed-loop manner.
The logic behind the GENIUS Act is likely to have accepted the fact that the credit boundary cannot be reversibly expanded. While clarifying the on-balance sheet regulatory framework, the United States has not set absolute restrictions on overseas issuance and repackaging paths. On the contrary, by giving more flexibility to compliance institutions, a multi-layered currency structure of on-balance sheet and on-chain parallelism and on-chain and off-chain coordination has been established. In this way, U.S. regulators can continue to maintain the credit foundation of the U.S. dollar in the on-chain system without intervening in the specific operation path, and control systemic risks through the first-tier access mechanism.
This also explains why, although the bill emphasizes that foreign issuers are not allowed to enter the U.S. market, it does not deny their existence. In fact, the path of overseas issuance, on-chain repackaging, and protocol cycle amplification constitutes the basic prototype of the new generation of US dollar expansion model, and its contribution to the influence of the US dollar is no less than that of the traditional offshore US dollar system. From this perspective, the Restaking mechanism in DeFi is not only a tool for improving liquidity efficiency within Crypto, but has also become a reference for credit leverage design in real financial structures.
The continued market expectations during the interest rate cut cycle prevent the a posteriori indicators from triggering a bear market
After analyzing the impact of the above macro events and future trends, I will return to some data indicators of Bitcoin, trying to find more evidence from the data to show the potential resilience of Bitcoin. First, let me talk about the conclusion I drew from the data: the continuous market expectations during the interest rate cut cycle make the a posteriori indicators unable to trigger a bear market.
In the process of observing the price trend of Bitcoin, various indicators can be divided into two categories according to their mechanism of action and timeliness: a priori indicators and a posteriori indicators. Furthermore, we can regard market sentiment as an intermediate variable connecting these two types of indicators, which plays a catalytic role in triggering supply and demand conversion and accelerating trend reversal.
So-called a priori indicators usually have a slower pace of change and higher trend prediction capabilities. These indicators do not mean that prices will reverse immediately, but rather indicate potential structural opportunities in advance, so they are very suitable for left-side position building - that is, the price has not yet clearly bottomed out, but has structurally established a staged low point for rebound.
In contrast, a posteriori indicators rely on the price path and trading behavior that the market has already taken to confirm whether the trend is really established. The core value of this type of indicator lies in trend verification. They are not used for prediction, but as a reference for trend-following operations after the market has taken a certain trend.
From the past four-year cycle to the current new market operation trajectory, many a priori and a posteriori indicators have lost their significance. The essence is that the main holders of Bitcoin have shifted from whales to institutions. Therefore, indicators such as miner shutdown price, Poole multiple, NUPL, etc., which were used to judge the bottom and top in the previous cycle, have begun to fail.
When buying Bitcoin in a new cycle, we need to remove the concept of bull-bear cycles from our minds, and instead use the highs and lows of market sentiment as the basis for judging the staged state of Bitcoin.
Market sentiment is reflected by the buyers of Bitcoin. Market sentiment is the micro-dynamic force between structural factors and price behavior. It is the direct reason for whether investors are willing to bet and collectively promote price trends. No matter how extreme the supply and demand are, if sentiment is not activated, the price may still be sideways; and if sentiment heats up rapidly, even if the structural support is limited, there may be a sharp rebound or sharp drop. Therefore, market sentiment has become an indispensable bridge variable connecting the a priori and the a posteriori, the structural logic and the trading behavior. The reversal or extreme value of sentiment can be analyzed by observing the relationship between long-term holders (LTH) and short-term holders (STH).
Profit and loss ratio of long-term holders to short-term holders
The profit and loss status conversion of LTH and STH often indicates important market turning points. The market bottom signal can be captured by observing the changes in the profit and loss ratio of long-term holders (LTH-RPC). When the indicator shows that long-term holders are beginning to suffer general losses, it often means that the market is approaching a stage low.
The principle of the indicator is:
When the profit ratio of long-term holders drops significantly and losses occur, it means that the profit space that can be realized is greatly compressed.
The continued loss will suppress the willingness to sell. As the number of chips available for sale decreases, the market selling pressure will gradually weaken.
When the selling momentum is exhausted to a certain extent, the market naturally forms a price bottom
Historical data support:
At the bottom of the bear market in 2018 and 2022, the proportion of losing chips of long-term holders reached the range of 28%-30%.
In the extreme market in March 2020, the indicator also climbed to around 29%.
In a bull market cycle, when this ratio reaches 4%-7%, it usually corresponds to the low point area of the correction.
The market characteristics of Bitcoin at 75,000 show:
The loss percentage of long-term holders has risen from nearly zero to 2.8%, and the price of Bitcoin is supported when it approaches the level of July 2024.
In the bull market cycle, the percentage of losses of long-term holders starts to rise from zero, indicating that the bottom is approaching, which is a priori indicator. When the loss exceeds 10%, it is called a posterior indicator of bear market confirmation. Then when the loss reaches about 30%, it is a priori indicator of the bottom of the bear market.
When the vast majority of long-term holders are in a profitable state, every price rebound will trigger profit-taking, forming a continuous downward pressure. Whether it is the bottom of a bear market or a bull market correction, when long-term holders generally turn to a loss-making state, it often means that the market is about to bottom out. Because at this time, the selling momentum has been fully released, and the unsustainable selling pressure will cause prices to stabilize and rise.
Under the influence of the first tariff shock and the negative sentiment of the recession black swan, the proportion of Bitcoin losses among long-term holders began to decline before reaching the proportion of previous bull market corrections, indicating that in the current cycle, the correction range of Bitcoin under extreme market shocks is limited.
STH-RPC is a priori indicator of market sentiment signals, and is a right-side entry signal. When it turns from negative to positive, it proves that the current demand is much stronger than the supply; when it turns from positive to negative, it indicates a local high.
Indicator principle:
When new short-term participants in the market gradually turn from loss to profit, it usually means that overall confidence is recovering. When price declines cause short-term participants to lose money, it means that sentiment may accelerate pessimism. Such changes are often accompanied by a reversal of market trends and are a key turning point signal for market sentiment.
Indicator trigger critical point:
Once the average cost of short-term holders exceeds their holding costs, it indicates that this group of funds is realizing profit and loss reversal. Their profit-making sentiment will bring stronger buying momentum, pushing prices to continuously cross the previous trading range until the upward momentum is neutralized by the selling pressure of long-term investors. Therefore, when the short-term holding cost line crosses the cost line, it often means that the market is warming up, and the signal of trend reversal has appeared on the right side of the chart.
In the trend of Bitcoin in the first half of this year, when STH-RPC turned negative, market sentiment accelerated pessimism, and then caused the loss rate of LTH-RPC to rise below 4%, which was a sign that market sentiment had bottomed out. The bear market signal of LTH-RPC losing more than 10% may not be triggered in the short-term cycle when the GENIUS Act is passed, the lethality of tariffs is limited, recession expectations fade, and consistent easing is approaching.
The long-term slow bull structure of Bitcoin is not linear, nor will it rise every day, but a wave path formed by several policy switches, geopolitical conflicts, technological changes and market sentiment. However, as long as the path of Bitcoins asset attribute evolution continues to be clear, it has the potential to become the most certain target of participation in this round of global capital revaluation.
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Disclaimer:
This article/blog is for informational purposes only and represents the personal opinions of the author and does not necessarily represent the position of Movemaker. This article is not intended to provide: (i) investment advice or investment recommendations; (ii) an offer or solicitation to buy, sell or hold digital assets; or (iii) financial, accounting, legal or tax advice. Holding digital assets, including stablecoins and NFTs, is extremely risky and may fluctuate in price and become worthless. You should carefully consider whether trading or holding digital assets is appropriate for you based on your financial situation. If you have questions about your specific situation, please consult your legal, tax or investment advisor. The information provided in this article (including market data and statistical information, if any) is for general information only. Reasonable care has been taken in the preparation of these data and charts, but no responsibility is assumed for any factual errors or omissions expressed therein.
