Monetary Policy

The White House held its second meeting on Tuesday, attempting to mediate the disagreement between the banking industry and the crypto industry over stablecoin yield issues. However, TradFi bank representatives brought a "principles document" insisting on a complete ban. The document calls for prohibiting any financial or non-financial incentives to stablecoin holders, emphasizing that stablecoin activities must never trigger deposit outflows.

Due to a temporary suspension by some government departments, the U.S. January non-farm employment report has been postponed to this Wednesday. Several employment data points show signs of weakness, raising concerns about a slowdown in employment. White House officials have adjusted market expectations, emphasizing that current employment growth can be seen as a stable level, and the market should pay attention to the impact of benchmark revisions.

Trump on February 10th said that choosing Powell as Federal Reserve Chair was a major mistake and that Kevin Warsh should have been selected. He repeatedly emphasized a growth vision, but the Federal Reserve has not made efforts in this direction. Warsh served as a Federal Reserve Board member from 2006 to 2011 and is known for his hawkish stance. Trump has been dissatisfied with Powell for a long time, publicly criticizing him during the 2018 rate hike, believing that he slowed down the economy.

Federal Reserve Board member Waller stated at the economic forum that volatility in the cryptocurrency market is normal. As the market integrates with traditional finance, selling pressure increases and regulatory uncertainties affect investor confidence. He emphasized that if you like volatility, you can enter the market; otherwise, it is not suitable to participate. Additionally, he mentioned plans to launch a simplified main account to promote innovation in fintech and the crypto industry.

Bitcoin (BTC) remains in a downturn, temporarily trading around $69,160 on February 11. Federal Reserve Board member Waller warned that the cryptocurrency boom is fading as it remains closely linked to traditional finance (TradFi). The former SafeMoon CEO was sentenced to 8 years in prison for a cryptocurrency scam and ordered to forfeit approximately $7.5 million and two residential properties.

Bank of America strategist warns that if the Federal Reserve adopts aggressive easing, the US dollar could depreciate by 10% this year, marking the worst in a decade. Two rate cuts are the baseline, and three are also possible, as narrowing interest rate differentials prompt overseas investors to sell dollars. Trump nominates Kevin Warsh to succeed Powell as Federal Reserve Chair, expecting more aggressive rate cuts. Currently, the interest rate is 3.50%-3.75%, and CME indicates the first of two rate cuts is expected in June.

U.S. stocks showed mixed performance on Tuesday, with the Dow Jones Industrial Average closing higher, but the S&P 500 and Nasdaq indices both falling due to weak retail data and AI competition. December retail sales were flat, reflecting a slowdown in consumer spending, which impacted traditional retail stocks. The crypto market remained subdued, with Bitcoin retreating to 68K, and the Fear Index indicating extreme fear. Market focus has shifted to upcoming employment and inflation data releases.

The U.S. stock market strengthened as the small business optimism index declined and retail sales remained weak, with rate cut expectations rising to 60 basis points. Concerns related to AI affected financial stocks, and investors bought on dips. Bitcoin fell below $70,000, and the outlook for tech stocks is cautious ahead of the upcoming employment data release.

If the Federal Reserve cuts interest rates early, the US dollar could decline by 10%, which would benefit digital assets like Bitcoin. Analysts believe that a weakening dollar is inversely correlated with Bitcoin prices, but caution is advised when analyzing investment risks and market changes.

The IMF warns that stablecoins may disrupt global payments and weaken local currencies in inflationary economies. While offering benefits like faster cross-border payments, risks include lack of regulation and potential for illicit activity. Regulatory clarity is essential for stability.

ChainCatcher News, according to Jinshi reports, Bank of America CEO Moynihan stated that interest rates will continue to decline, which is very favorable for the market.

BlockBeats News, February 10 — Bank of America Global Research states that the Bank of Japan is expected to raise interest rates by 25 basis points in April, earlier than the previously expected June; it is also expected that the Bank of Japan will raise interest rates by another 25 basis points in September 2026, followed by two more increases of 25 basis points each in January and July 2027. (Jin10)

White House Chief Kevin Hassett states that future employment may decline due to slower labor force growth and increased productivity. From November to December, the average non-farm payroll increase was 53,000 per month, far below the pre-pandemic average of 183,000. He emphasizes that the economy is not weak, and tighter immigration combined with rising productivity allows growth even with limited labor force. The January forecast is an increase of 70,000. Powell says that demand and supply are declining simultaneously, making it very difficult to interpret at present.

Federal Reserve Board Governor Christopher Waller stated on February 9 that recent sharp fluctuations in Bitcoin indicate that the TACO trading frenzy that occurred when the Trump administration took office has subsided. Bitcoin fell to $60,000 on February 5, nearly erasing the gains since Trump's election. Waller pointed out that the surge in volatility is driven by regulatory uncertainty and institutional risk management, with companies entering through ETFs being forced to close positions.

Research firm Bernstein maintains its Bitcoin forecast of $150,000 by the end of 2026, stating that the current dip is the least threatening downturn in trading history. The analyst team pointed out that recent weakness stems from a shift in market sentiment rather than a fundamental collapse, and this sell-off has not seen leverage crashes, exchange failures, or systemic vulnerabilities. Institutional support remains solid, with participation from spot ETFs, corporate finance, and mainstream asset management firms unchanged. Miner debt structures are healthy enough to withstand a prolonged downturn.

Bitcoin reported $70,000 on February 10, and remains in a sluggish trend. Long-term holders' net positions decreased by 245,000 BTC, but the total supply increased from 13.63 million to 13.81 million, indicating reallocation. On February 6, 66,940 BTC flowed into accumulated addresses, reaching the weekly maximum, indicating whale accumulation. The Sharpe ratio of -10 hits a new low, consistent with the late bear market.

Sanae Takashi's Liberal Democratic Party (LDP) has secured an over two-thirds supermajority in the House of Representatives, marking a historic turning point in Japanese politics. The market bets that Takashi's policies will drive expansionary fiscal measures, leading the yen to weaken against the US dollar to the 157.50 range. The Japanese stock market benefited from policy tailwinds and surged strongly, while the bond market was pressured by expectations of fiscal expansion. This victory not only consolidates Takashi's ruling position but also signals Japan's move toward an economic path characterized by large-scale borrowing to support public spending.

Japanese Prime Minister Sanae Takaichi achieved the biggest post-war victory in the February 8 parliamentary election, with the Liberal Democratic Party expected to secure 274 to 326 seats. The market responded quickly, with the US dollar rising 0.2% against the yen to 157, and Bitcoin surging 5% against the yen. The strong mandate paves the way for crypto tax reforms, with the current top rate of 55% potentially reduced to 20%, along with capital gains tax and allowing loss carryforwards for three years.

Economist and Bitcoin advocate Lyn Alden states that the Federal Reserve is entering gradual money printing, mildly stimulating without large-scale liquidity injections. She recommends holding scarce assets and balancing from optimistic sectors to underweighted ones. Trump nominates hawkish Waugh, with March rate cut expectations dropping to 19.9%. Alden says all policies will ultimately lead to currency depreciation.