Many people only see the surface excitement of geopolitical conflicts, but Wall Street focuses on the numbers. Especially at this moment, understanding the economic logic behind U.S. foreign policy is actually understanding the capital markets — and thereby understanding the next move of Bitcoin.

The most straightforward example: Why do capital markets prefer "precision strikes" over traditional warfare? Both involve conflict on the surface, but the economic implications are completely different.

**Huge Differences in Cost Structure**

What does traditional warfare (taking Iraq as an example) entail? Trillions of dollars in fiscal deficits. Where does this money come from? Printing money. Once the Federal Reserve initiates quantitative easing, inflation soars, and the dollar depreciates. This is a double whammy for U.S. stocks and bonds, while boosting gold and safe-haven assets.

But precision strikes are different. The cost might only be tens of millions of dollars, almost no pressure on the U.S. fiscal budget. What is the market’s reaction? It sees the efficient operation of U.S. power and the reinforcement of dollar hegemony. At this point, the dollar index strengthens, U.S. Treasury yields rise, and investors sell off gold and safe assets, shifting to the dollar and U.S. stocks.

What about Bitcoin? In a strong dollar environment, risk assets come under pressure. This is the basic logic.

**Long-term Significance of Restructuring the Energy Supply Chain**

But this is not the deepest logic. The most critical factor is energy.

Venezuela holds the world’s largest proven oil reserves, but these oil flows are now blocked. Why? Sanctions. The current regime is sanctioned by major Western countries, causing Venezuela, a major supplier, to be absent from the global oil market.

If the situation changes and a pro-Western new regime comes to power and sanctions are lifted, what will happen? Global oil supply will suddenly increase, putting pressure on crude oil prices. Inflation expectations will decline, and the dollar will strengthen further. Looking at risk assets linked to inflation — including Bitcoin — they will also face adjustment pressures.

**Short-term vs. Long-term Market Pricing**

How will the markets react this year? There may be some volatility in the short term, but once this "strong dollar + low inflation expectations" pattern is established, risk assets may generally enter a correction phase. Gold will be suppressed, and Bitcoin will find it hard to remain unaffected.

In the long run, everything depends on the Federal Reserve’s policy path. But for now, geopolitics is essentially signaling price signals to the capital markets.