The policy orientation of the new US administration indicates that the Federal Reserve is facing new pressures. To advance the final stage of inflation targeting and stabilize employment rates during the mid-term election cycle, interest rate cuts seem to be an inevitable choice. However, the reality is more complex: AI technology is rapidly replacing low-end customer service, clerical, and other service industry jobs, limiting the room for improvement in traditional employment data.

The scale of US debt continues to expand. According to forecasts, large-scale fiscal stimulus bills could push US debt beyond the $40 trillion mark. Ultimately, this situation will rely on the Federal Reserve to resolve—and the Fed’s solution is nothing more than releasing liquidity and using inflation to dilute the real value of debt. With Powell’s term coming to an end, there is limited room for policy coordination with the new government in the short term.

From a macro perspective, global liquidity flooding has become an inevitable trend. In this context, the continued rise of various assets is well justified. For the Bitcoin market, the probability of new lows in the short term (before March) is relatively low; at the same time, expectations of a new round of rate cuts in March are also rising, which will further support the performance of risk assets.

Overall, defensive investors and those focusing on long-term value can stay attentive, but should be cautious of short-term pullback risks caused by policy reversals and market sentiment fluctuations.