Matrixport Investment Research: A Brief Analysis of Risk Factors in This Round of Crypto Bull Market

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There are multiple potential threats that could affect the current BTC bull run, with one notable concern coming from BlackRock, which said that due to the decentralized nature of the BTC protocol, there is “no guarantee” that Bitcoin’s 21 million supply cap will remain unchanged. This statement has sparked discussion, but should be viewed in context.

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Recent developments, such as Google’s announcement of its 105-qubit “Willow” quantum chip, have once again sparked discussions about the potential long-term threat of quantum computing to BTC security. While the technology is still in its early stages and lacks the scale and stability to directly undermine BTC’s kriptographic defenses, the theoretical risks are worth paying attention to.

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Federal Reserve members recently raised their inflation expectations. The change was driven more by political considerations than by factors such as economic growth or supply bottlenecks, as was the case during the COVID crisis. Specifically, concerns about Trumps potential tariffs—which economists widely believe are inflationary—appeared to have influenced their expectations. However, the impact of these tariffs on inflation during Trumps first term was minimal. This suggests that the Feds inflation expectations may not be fully consistent with current economic realities, which could create room for flexibility in setting policy in the coming year.

Inflation models predict that inflation will not be a significant problem next year, which may allow the Fed to maintain a dovish stance.

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Based on past experience, BTC bull markets tend to peak when regulatory pressure reaches a critical point. With most of the regulatory overhang appearing to be resolved – marked by the SECs approval of a BTC spot ETF – the risk of the end of this BTC bull run may depend on other factors. While abandoning near-zero interest rates in December 2021 was a major change, the Fed has recently indicated its intention to cut interest rates for more than a year before implementing its first rate cut in September 2024.

However, as we cautioned at the time, the FOMC could have taken a more hawkish stance if Trump became more likely or was confirmed, both of which have now materialized. This scenario introduces new uncertainty for BTC and the broader crypto market, as the Fed’s response to Trump’s potential fiscal policies could affect the trajectory of monetary policy.

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