I have received many private messages from friends recently, all asking the same question: With the US dollar continuing to weaken against major currencies, is this really the start of a weak dollar cycle? How should I adjust my crypto assets and traditional financial assets? Based on recent market observations, I want to discuss this topic with everyone.

**What is the current situation?**

The Federal Reserve cut interest rates by 25 basis points again in early December, bringing the total cuts for the year to 75 basis points. But there is an interesting detail—internal disagreements are more apparent than ever, with the first time in six years that three members voted against the rate cut. What does this mean? The policy direction itself is uncertain, and the market will naturally fluctuate repeatedly as it tests the waters.

Looking at the data, the US dollar index has fallen 10.8% in the first half of this year, the worst performance since 1973. Some believe this time is different, not just due to economic cycles, but because the dollar’s credibility is weakening—US national debt has surpassed $38 trillion, with interest payments alone accounting for 18% of fiscal revenue. In other words, the status of the dollar as the "safest asset" is being challenged.

**Where is the capital flowing during the weak dollar cycle?**

First, it’s important to clarify: money doesn’t stay idle. With US Treasury yields no longer attractive and the dollar facing depreciation pressure, capital is definitely flowing out. Historical patterns are clear—during the previous dollar depreciation cycle (1971-1978), gold prices increased fivefold. What about this cycle? Gold has already risen nearly 68%, and crypto assets are also attracting renewed attention.

This is no coincidence. When dollar credibility declines, people naturally seek alternatives—whether traditional safe-haven assets like precious metals or decentralized assets like cryptocurrencies. The performance of non-US currencies and emerging markets also tends to be more resilient.

**But this process won’t be smooth sailing**

Reallocating assets isn’t instantaneous. For example, after the last rate cut, cryptocurrencies initially declined because the positive effects had already been priced in. Fluctuations, changing expectations, technical adjustments—these are normal during transitional periods. Don’t be scared by daily price swings.

The real opportunity lies in understanding this broader trend—under a weak dollar cycle, the paradigm for asset allocation is changing. Early positioning is key to profiting amid volatility.