I recently watched a speech by the co-founder of a derivative trading platform at the Bitcoin conference, and his perspective is quite interesting. He believes that the market is currently experiencing a massive liquidity shift, with hot money about to flood into the financial markets, which could be a great signal for Bitcoin.

The core logic is as follows: In the past, the market worried about unemployment caused by AI and credit deflation, but everything changed after the outbreak of geopolitical conflicts in February this year. Countries began significantly increasing their defense spending, with the US budget even 50% higher than before. The only way out is to print money. And it’s not just central banks printing; commercial banks are playing a key role as well.

He mentioned a detail: the Fed loosened the bank leverage ratio regulations, which will directly release banks’ lending capacity. S&P estimates that this reform alone could generate $1.3 trillion in new loans. Considering the banking multiplier effect, roughly three times the central bank’s impact, this means the market could see up to $4 trillion in credit expansion. This hot money scale is enough to completely offset the credit losses caused by AI-related unemployment.

Even more interesting is the “asset swap” between banks and the central bank: banks will convert about $3 trillion of their reserves into US Treasuries and repurchase agreements. On the surface, the central bank’s balance sheet is shrinking, but in reality, liquidity within the system isn’t decreasing at all—it’s just changing form.

Regarding the new policy direction of the Federal Reserve’s new chair, he believes there’s no need to worry too much. The new chair must coordinate with the Treasury Secretary to maintain market order while the government continues to issue debt. The US has already issued $38 trillion in Treasuries, and the government needs funds to operate. Ultimately, the Fed will ensure market stability to keep people willing to buy US debt.

On recent geopolitical risks, he monitors the oil futures spread daily to assess whether commodity liquidity is normal. His conclusion is: although there’s pressure, it’s not enough to trigger a major sell-off of risk assets. This also indicates that the market’s expectations of the wartime economy have been largely digested.

Putting the whole logic together: wartime spending soars → central banks and the banking system significantly release liquidity → hot money floods into various assets → Bitcoin benefits as an inflation hedge. He gave a target price of $125k by the end of the year in his speech.

Currently, BTC is around $81.7k. From this perspective, there’s still considerable room for upward movement. However, the key assumptions of this logic are that liquidity will indeed be released as expected, and that hot money will ultimately flow into risk assets rather than the bond market. These are all worth continuous observation. Recently, I’ve also been monitoring macro indicators and capital flow data on Gate; if you’re interested, you can check them out yourself.