The global interest rate reduction cycle has begun, and the Crypto Assets market is about to welcome a strong Rebound.

In the current macroeconomic situation, the investment strategy for Crypto Assets is facing a new turning point. As some central banks begin to cut interest rates, the Crypto Assets market is expected to recover from the summer slump, indicating that a new bull market may be on the horizon. Since 2009, Bitcoin and other Crypto Assets have been powerful tools against the traditional financial system. In light of the current changes in the macro environment, it may be wise to take a bullish stance on Bitcoin and other Crypto Assets, as the market is likely to experience a strong Rebound.

The USD-JPY exchange rate is a key macroeconomic indicator. One possible solution to strengthen the yen is for the Federal Reserve to exchange unlimited yen with newly issued dollars from the Bank of Japan. This would enable the Bank of Japan to provide ample dollar funding to the Japanese Treasury for purchasing yen in the global foreign exchange market.

However, the current situation is that major central banks seem to choose to let the market believe that the interest rate differentials between the yen and the US dollar, euro, British pound, and Canadian dollar will narrow over time. If the market accepts this expectation, it will buy yen and sell other currencies. To achieve this goal, major central banks must lower their policy interest rates.

It is worth noting that the Bank of Japan's policy interest rate is only 0.1%, while the rates in other countries are around 4-5%. The interest rate differential between currencies is a fundamental factor affecting exchange rates. From March 2020 to early 2022, major economies around the world implemented loose monetary policies. However, when inflation became severe enough to be unignorable, major central banks, except for the Bank of Japan, began to actively raise interest rates.

The reason the Bank of Japan cannot raise interest rates is that it holds over 50% of the Japanese government bond market. When interest rates fall, bond prices rise, making the Bank of Japan's balance sheet appear healthy. However, if the Bank of Japan allows interest rates to rise, bond prices will fall, and this highly leveraged central bank will suffer huge losses.

Therefore, if the goal is to narrow the interest rate spread, the only option is for those central banks with higher policy rates to lower their rates. Traditionally, it is reasonable to cut interest rates when inflation is below target. However, currently, no major economy has an inflation rate below the 2% target.

Nevertheless, this week the Bank of Canada and the European Central Bank chose to cut interest rates despite inflation being above target. This approach contradicts traditional central bank theory and has sparked speculation about the potential for some financial turmoil.

The core issue lies in the weakness of the yen. It may be time to start maintaining the dollar-dominated global financial system. If the yen is not strengthened, it may lead to the depreciation of other countries' currencies, which in turn could affect the U.S. Treasury market, posing a threat to the United States' global economic dominance.

The upcoming G7 meeting will draw significant attention from the market. Will they announce some coordinated currency or bond market operations to strengthen the yen? Or will they silently agree for other central banks, aside from the Bank of Japan, to start cutting interest rates? The answers to these questions will have a substantial impact on the market.

Whether the Federal Reserve will start to cut interest rates as the US presidential election approaches is an important question. Generally, the Federal Reserve does not change policy on the eve of an election. However, given the current special political environment, we need to maintain flexible thinking.

If the Federal Reserve cuts interest rates at the upcoming meeting while the inflation indicators they are monitoring remain above target, the USD-JPY exchange rate may drop significantly, meaning the yen will strengthen. However, considering the current political and economic situation, the Federal Reserve may choose to keep policy unchanged.

Overall, the monetary policy of major central banks is changing, and fringe central banks have begun a new round of easing cycles. This trend is positive news for the Crypto Assets market.

In this macro environment, investors may consider increasing their investments in Bitcoin and other Crypto Assets. For those holding stablecoins and earning high yields, now may be a good time to redeploy funds into promising encryption projects.

The Crypto Assets bull market seems to be awakening and may soon exceed people's expectations. During this period full of opportunities, investors should remain vigilant, closely monitor market trends, and make informed investment decisions based on their risk tolerance.