In the midst of strategizing, we decide victories from thousands of miles away. Hello everyone, I am Lin Chao, a global financial market observer, focusing on cryptocurrency market analysis, bringing you the most in-depth trading information analysis and technical teaching.

In previous articles, Lin Chao provided a detailed analysis of the market changes brought about by the tapering. The global economy is a whole, and as a qualified global financial market observer, we must broaden our horizons, rather than just focusing on the cryptocurrency market itself. With the unfolding of the market, in my view, the signal released by Powell indicating a "possible halt to tapering" seems to be good news on the surface, but the market responded with a decline. This seemingly contradictory phenomenon is key to understanding the current core contradiction in the global market — the "power game of finance and currency." To see through all this, we must first understand the helplessness behind the halt to tapering, as well as the "small moves" of the U.S. Treasury.

Halting Tapering: Not "Injecting Liquidity," but "Firefighting"

First, we need to dispel a myth. Under conventional understanding, the Federal Reserve's tapering means withdrawing liquidity from the market, so halting tapering naturally implies stopping the withdrawal, which is beneficial for the market. However, this time, the logic has changed.

The root of the problem lies with the U.S. Treasury. Due to the deadlock between the two parties in Congress over the debt ceiling issue, the U.S. government had already experienced a "shutdown" for several days at the beginning of October, and it is currently facing the risk of a "closure." What happens when the Treasury runs out of money? It has a Treasury General Account (TGA). To replenish this account, the Treasury has been "withdrawing" from the banking system in recent months. This "withdrawal" action has directly consumed the core liquidity of the market — bank reserves.

You can imagine: the market is a pool of water, with the Federal Reserve using a "tapering" pump to draw water out on one side, while the Treasury is using a "debt issuance to replenish cash" pump to draw even more aggressively on the other side. Powell saw the water level dropping too quickly, and it was about to hit bottom, threatening market stability, so he had no choice but to announce, "I’ll pause here, or the pool will dry up!" Therefore, halting tapering is not an active easing but a passive emergency firefighting measure. The market saw through this "helplessness" and naturally did not buy it. Thus, as you can see, even though Powell indicated the possibility of ending the tapering cycle, the market still showed a downward trend.

Three Outcomes of a "Power Game," All Pointing to Gold

In my view, this "struggle" between the Federal Reserve and the Treasury, regardless of who wins, may ultimately push funds into the embrace of gold. There are three possible outcomes of this game:

Treasury "Wins": If the Treasury continues to ignore the Federal Reserve and aggressively withdraws from the market, it means that the independence of the Federal Reserve's monetary policy is severely challenged. When the market realizes that those controlling the dollar faucet have no say, the erosion of confidence in the dollar will be the most solid foundation for gold's rise.

Federal Reserve "Wins": If the Federal Reserve retaliates strongly and prevents the Treasury from withdrawing, then the U.S. government will fall into a deeper "shutdown" crisis due to lack of funds. The enormous uncertainty brought about by a government shutdown is also a catalyst for gold's rise.

Bipartisan Compromise, Raising the Debt Ceiling: This seems to be the best solution, but in essence, it burdens the country with more debt, laying the groundwork for future monetary overissuance. More debt means long-term dilution of dollar credit, which is still a long-term positive for gold.

The conclusion is clear: in this game, gold has become a "safe haven." Whether it’s short-term risks (government shutdown) or long-term hidden dangers (debt monetization, damage to dollar credit), it seems that gold is the beneficiary. This perfectly explains why gold has been so strong recently, seemingly ignoring all negative factors.

Lin Chao's Summary:

Based on the above analysis, I want to remind everyone to pay attention to:

The risks in the global market are increasing. We are currently in a critical period of intense global technological competition, heavily reliant on the continuous supply of financial "fuel." The internal strife between U.S. fiscal and monetary policy is eroding this liquidity foundation. Once the "fuel" supply is cut off, global risk assets may face severe adjustments.

Beware of the trap of following risky products. Seeing gold rise, many investors may mistakenly believe that the period of liquidity injection will arrive immediately and blindly chase risk markets. Although Lin Chao primarily focuses on cryptocurrency trading, I must emphasize that all cryptocurrencies, including Bitcoin, are high-risk products, with volatility far exceeding that of gold. When real risks arise, gold's resilience is usually stronger. Therefore, for friends without rich investment experience, this is a high-difficulty investment period. First, protect your wallet; second, do not chase high prices in gold, do not chase high prices in gold, do not chase high prices in gold.

Looking back at the cryptocurrency market, we analyze the short-term changes we can foresee. Since the "black swan event" on October 11, Bitcoin's sideways pattern has been disrupted. Lin Chao has repeatedly emphasized that after experiencing a clear top structure, the most conservative approach is to exit and wait. With the repair over the past week, we have not seen strong signs of stabilization. Lin Chao has previously reminded everyone that whether in a bull or bear market, the pattern will not emerge in a single day. However, different cycles require different operational approaches. Considering that some short-term users are looking for a suitable exit timing, everyone can actually patiently wait until around October 30, before and after the Federal Reserve's interest rate cut announcement, to make specific operations, as the market may engage in short-term speculation on this interest rate cut expectation.

From the short-term trend of SOL, we can observe this information more clearly. First, the K-line from October 11 has completely disrupted the previous upward trend. Secondly, during the subsequent repair process, the index has turned back down upon hitting key areas, which has clearly given everyone a warning. If we cannot repair above the key support level within this week, we may face at least a monthly level correction or even a quarterly level correction in the short term. Therefore, the index trend this week is particularly crucial. It can provide us with directional guidance. Users focusing on short-term operations must remain vigilant, prepare for key points, and make advance trading plans, including preparations for contract hedging positions at critical times, all of which are very important.

**If you are feeling lost — not understanding technology, unable to read charts, unsure when to enter the market, not knowing how to set stop losses, not understanding take profits, randomly increasing positions, getting stuck while bottom-fishing, unable to hold onto profits, missing market opportunities… these are common problems for retail investors. Lin Chao can help you establish the correct trading mindset. A single profitable trade is worth more than a thousand words; finding the right direction is better than repeatedly failing. Instead of frequent operations, it’s better to strike precisely, making each trade more valuable.
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The success of investment depends not only on choosing good targets but also on when to buy and sell. Preserving capital and making good asset allocations are essential for steady progress in the ocean of investment. Life is like a long river flowing into the sea; what determines victory or defeat is never the gains and losses of a single pass or the profits and losses of a moment, but rather planning before action and knowing when to stop to gain.

The global market is ever-changing, and the world is a whole. Follow Lin Chao to gain a top-tier global financial perspective.

This article is merely a personal opinion and does not constitute any trading advice. The cryptocurrency market is risky; invest with caution!

For real-time consultation, feel free to follow the public account: Lin Chao on Cryptocurrency.

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