Analyzing the current macroeconomy: AI is the only engine driving the economy, and the market is driven by emotions and capital flow.

Author: arndxt, Crypto KOL

Compiled by: Felix, PANews

The only engine driving GDP now is artificial intelligence, while everything else is on a downward trend, such as the labor market, household conditions, purchasing power, and asset acquisition capabilities. Everyone is waiting for the so-called "cycle reversal." But there is fundamentally no cycle. The facts are:

The market is not currently focused on fundamentals.
AI capital expenditure is actually the key to preventing a technical recession.
A wave of liquidity will arrive in 2026, and the market consensus has not even begun to price this in.
Inequality is a headwind hindering macroeconomic development, forcing governments to implement policies.
The bottleneck for AI is not GPUs, but energy.
For the younger generation, cryptocurrency is becoming the only asset class with real upside potential, making it meaningful.

Do not misjudge this transformation risk and invest funds on the wrong side.

1. Market dynamics are not driven by fundamentals

In the past month, despite no new economic data being released, price volatility has been intense due to a shift in the Federal Reserve's tone.

The probability of interest rate cuts dropped from 80% to 30% and then rose back to 80%, entirely based on the remarks of individual Federal Reserve officials. This aligns with the situation where systematic capital flows in the market exceed subjective macro views.

Here are some pieces of evidence regarding microstructure:

Volatility-targeting funds mechanically reduce leverage when volatility spikes and increase leverage when volatility declines. These funds do not care about the "economy" because they adjust risk exposure based on one variable: market volatility. When volatility rises, they reduce risk → sell. When volatility falls, they increase risk → buy. This leads to automatic selling during market weakness and automatic buying during market strength, amplifying bidirectional volatility.

Commodity Trading Advisors (CTAs) switch long and short positions at preset trend levels, causing forced capital flows. CTAs follow strict trend rules:

If the price breaks above a certain level → buy.
If the price breaks below a certain level → sell.

There is no "opinion" behind this, just mechanical operations.

Therefore, even if the fundamentals do not change, when enough traders set stop-loss orders at the same price level at the same time, large-scale, coordinated buying or selling behavior occurs.

These capital flows can sometimes cause entire indices to fluctuate for several days.

Stock buybacks remain the largest single source of net stock demand. In the stock market, companies repurchasing their own shares are the largest net buyers, surpassing retail investors, hedge funds, and pension funds. During open buyback windows, companies consistently inject billions of dollars into the market each week.

This results in:

An inherent upward trend during buyback seasons
A noticeable weakness after the buyback window closes
Structural demand unrelated to macro data

This is why stock prices may still rise even when market sentiment is extremely poor.

The VIX curve inversion reflects short-term hedging imbalances, not "panic." Typically, long-term volatility (3-month VIX) is higher than short-term volatility (1-month VIX). When this reverses, and near-month contract prices become higher, people tend to think "panic has intensified."

But nowadays, it is usually caused by:

Short-term hedging demand
Options traders adjusting risk exposure
Capital inflows into weekly options
Systematic strategies hedging at month-end

This means:

A spike in the VIX index ≠ panic.
A spike in the VIX index = hedging capital flows.

This distinction is crucial because it means volatility is now driven by trading rather than market sentiment.

This leads to the current market environment being more sensitive to market sentiment and more reliant on capital flows. Economic data has become a lagging indicator of asset prices, while the Federal Reserve's communication has become the main trigger for volatility.

Liquidity, positioning, and policy tone now drive price discovery more than fundamentals.

2. AI is preventing a full-blown recession

Artificial intelligence has begun to act as a macroeconomic stabilizer.

It effectively replaces cyclical hiring, supports corporate profitability, and maintains GDP growth in the face of weak labor fundamentals.

This means that the U.S. economy's dependence on AI capital expenditure is far greater than policymakers publicly acknowledge.

AI is suppressing demand for the one-third of the workforce that is low-skilled and most easily replaceable. This is where cyclical recessions typically first manifest.
Productivity gains mask the widespread deterioration of the labor market that would otherwise be evident. Output remains stable because machines are taking on work previously done by entry-level labor.
Companies benefit from a reduced workforce, while households bear the socioeconomic burden. This shifts income from labor to capital—a typical recession dynamic, obscured by productivity gains.
AI-related capital formation artificially sustains GDP resilience. Without AI capital expenditure, overall GDP data would show significant weakness.

Regulators and policymakers will inevitably support AI capital expenditure through industrial policies, credit expansion, or strategic incentives, as otherwise, an economic recession would occur.

3. Inequality has become a macro constraint

Mike Green's analysis (with the poverty line around $130,000 to $150,000) has sparked strong opposition, indicating how widely resonant the issue is.

The core facts are:

Childcare costs exceed rent/mortgage
Housing is structurally difficult to obtain
The baby boomer generation dominates asset ownership
Younger groups have income but no capital
Asset inflation exacerbates the gap year by year

Inequality will force adjustments in fiscal policy, regulatory stance, and asset market interventions.

Cryptocurrency has become a tool for the population, serving as a means for the younger generation to achieve capital growth.

4. The bottleneck for AI is energy, not computing power

Energy will become the new focal topic. Without corresponding energy infrastructure expansion, the AI economy cannot scale. Discussions around GPUs overlook the larger bottlenecks:

Electricity
Grid capacity
Nuclear and natural gas development
Cooling infrastructure
Copper and critical minerals
Data center site restrictions

Energy is becoming a limiting factor for AI development.

Energy, particularly nuclear, natural gas, and grid modernization, will become one of the most influential investment and policy areas in the next decade.

5. Two economies are emerging, with a widening gap

The U.S. economy is bifurcating into a capital-driven AI industry and a labor-intensive traditional industry, with almost no overlap.

The incentive mechanisms of these two systems are becoming increasingly different:

AI Economy (Scalable)

High productivity
High profit margins
Low labor input
Strategic protection
High capital attractiveness

Real Economy (Shrinking)

Weak labor absorption capacity
High consumer pressure
Decreased liquidity
High asset concentration
Significant inflationary pressure

The most valuable companies in the next decade will build solutions that can reconcile or leverage this structural difference.

6. Future Outlook

AI will be supported because there is no alternative; otherwise, it will lead to economic recession.
Treasury-led liquidity will replace quantitative easing as the main policy channel.
Cryptocurrency will become a political asset class linked to intergenerational wealth.
Energy will become the true bottleneck for AI, not computing power.
In the next 12 to 18 months, the market will still be driven by sentiment and capital flows.
Inequality will increasingly influence policy decisions.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。